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Q: UK Pension Valuation: Putting a market value on a UK final salary pension ( No Answer,   2 Comments )
Question  
Subject: UK Pension Valuation: Putting a market value on a UK final salary pension
Category: Business and Money > Accounting
Asked by: jf123-ga
List Price: $10.00
Posted: 03 Dec 2005 14:13 PST
Expires: 17 Dec 2005 13:44 PST
Question ID: 601007
I am looking for a valuation, including the methodology used, for a UK
final salary pension.
Details are as follows:
I have worked for 10 years and the pension is based on 1/60ths of
final salary payable at 60.
I am 36. 
Once paid, the pension is guaranteed to rise annually by RPI upto 5%
and by higher than 5% at the descretion of the trustees.
50% of the benefit is paid to my wife upon my death until her death. 

So if my currently salary is £x/annum, what would be the market value
(i.e. open market replacement cost) of such a scheme and how is this
calculated?
Answer  
There is no answer at this time.

Comments  
Subject: Re: UK Pension Valuation: Putting a market value on a UK final salary pension
From: murunbuchstansinger-ga on 04 Dec 2005 12:59 PST
 
The trustees are required to give a transfer value if requested and
this is effectively the market value, as they determine how much can
be transferred in £, S and D as it were.

There are many reasons you might require a value - divorce, moving
jobs, transferring scheme or even the amount of your lifetime
allowance which will be "used" by this portion of pension post 6th
April next year - AKA "A day".

You may also want to bear in mind other benefits attached to your
pension - are there also dependants pensions payable - is there death
in service (often 4x salary), is early retirement allowable under the
scheme?.

Doesn't answer your question, as I will leave that for a paid
researcher, but you might want to clarify your question if you want an
answer to suit your needs properly.

Good luck
Subject: Re: UK Pension Valuation: Putting a market value on a UK final salary pension
From: murunbuchstansinger-ga on 04 Dec 2005 13:02 PST
 
Actually, I have just re-read your question.

You say "open market replacement cost". It is very very easy to get a
misleading answer to this question, even if you have lots of formulae
and (erk!) assumptions to back it up. The key being "replacement".

I'll let you work out why.

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