Enhanced Transfer Value or Cash Incentive
The trustees of the Existing Scheme are prepared to offer a transfer value of £350,000, in lieu of benefits under the Existing Scheme, that can be invested into a Personal Pension or Section 32 contract. The transfer value used in this report is £450,000. This includes an amount representing the cash incentive of £80,000 offered by the scheme plus Basic Rate Income Tax, and therefore assumes that you would reinvest this amount to provide additional pension benefits, rather than opting for the enhanced transfer value. Please note that the amount reinvested and, therefore, the total Transfer Value, would change depending on the rate of Income Tax you pay.
Transfer Value Expiry Date
The transfer value quoted by the Existing Scheme is out of date and will need to be recalculated if a transfer of benefits proceeds. Therefore, any enhancement or cash offer applicable to this transfer value may no longer be valid.
Ill-Health Retirement Benefits
The majority of final salary occupational pension schemes have the scope to pay enhanced benefits to members who wish to retire early due to ill-health. The level of enhancement, and indeed, whether any such enhancement will be paid is usually at the discretion of the scheme trustees on a case by case basis. This potential benefit will however be lost upon transfer to a Personal Pension or Section 32.
Male and Female retirement ages for the Existing Scheme have been equalised at 65.(42)
The existing scheme benefits include GMP. At present, it is unclear whether these benefits should be equalised along with other scheme benefits. The Pensions Ombudsman has determined that a scheme should equalise GMP benefits, but in the High Court appeal, this determination was overturned on the grounds that it was beyond the ombudsman's jurisdiction. The High Court left open the question as to whether or not GMP benefits should be equalised, and if so, how this might be done.
The existing Scheme remains open to new members.
The Existing Scheme is known to be fully funded. Therefore, it is unlikely that any increase in benefits in favour of members will take place in the near future.
It is understood that the Existing Scheme is not a member of a transfer club. Therefore, this is not an issue that needs further consideration.
Discretionary Increases and Transfer Value
It is understood that the transfer value quoted by the Existing Scheme takes no account of the discretionary increases payable under the scheme.
Section 32 GMP Coverage(43)
It appears that the transfer value would be sufficient to cover the GMP liability for this case upon retirement at ages 65 and 60.