TVC – Transfer Value Comparator

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Transfer Value Comparator (TVC)

PS18/6 has specified that from the 1st October 2018 a Transfer Value Comparator (TVC) has to be included within an Appropriate Pension Transfer Analysis (APTA).

 

We include the Transfer Value Comparator as part of our Transfer Value Analysis (TVA) Report.

 

 

Basic Transfer Value Comparator (TVC)

The new Transfer Value Comparator (TVC) provides a very general “non-personalised” comparison between the scheme benefits and the proposed cost to replace these benefits with an insurer.


The TVC assumes:

 

  • The client is married and provides a current value of benefits including a spouse’s pension
  • The spouse’s date of birth is +/- 3 years (females 3 years younger)
  • The client will take a pension only and will not take any tax-free lump sum.
  • The client will retire from the scheme at the age benefits “would normally be paid”
  • The transfer has no effect on the client’s Lifetime Allowance
  • The client will not be entitled to any children’s pensions
  • No death in deferment benefits are to be valued


The FCA specify the TVC financial assumptions for the:

 

  • Capitalised value of the pension at retirement
  • Total adviser/fund/platform charges to be used in the calculations of 0.75%
  • Investment returns / discount rates for determining current values

 

 

Briggs Murray extension to Transfer Value Comparator (TVC) results

 To provide more personalise results we have added:

 

  • Additional results assuming the maximum tax-free cash is taken
  • Additional results assuming retirement at your planned retirement age
  • Allowance for the actual spouse’s date of birth
  • Including and excluding the cost of replacing the spouse’s pension
  • Lifetime Allowance is taken into account (if applicable)

 

Note:  The Cost of Replacing Benefits at Retirement and Estimated Current Replacement Cost use the FCA assumptions for investment returns / discount rates + charges.

 

  • Total adviser/fund/platform charges to be used in the calculations of 0.75%
  • Investment returns / discount rates for determining current values

 

 

Briggs Murray Drawdown Comparison & Critical Yield Calculations

In addition to:

 

  • Allowing for a maximum tax-free cash option
  • Allowing for the planned retirement age
  • Using the actual spouse’s date of birth
  • Including and excluding the cost of replacing the spouse’s pension
  • Allowing for Lifetime Allowance (if applicable)

 

We believe that to achieve a meaningful comparison between the scheme pension and CETV offering the calculations need to use:

 

  • Actual initial adviser fees
  • Actual on-going adviser fees
  • Accurate proposed fund charges
  • Accurate proposed fund platform charges
  • Actual details regarding children’s pensions entitlement
  • Actual death in deferment benefits for comparison and valuation
  • A risk based proposed future real rate of return

 

 

Our critical yield calculations show the yield required, allowing for all actual charges, to match the scheme benefits (assuming annuity purchase at retirement).

 

Our drawdown modeller comparisons use actual charges and allow for the proposed retirement strategy post transfer (as opposed to assuming everyone purchases an annuity in an attempt to replicate the scheme benefits precisely).

 

The Drawdown modeller makes use of the FCA new business illustration assumptions which include a LOW, MID & HIGH assumptions dependant on the investments chosen.