Enhanced Transfer Value Exercises

Enhanced Transfer Values (ETVs) are an alternative risk management solution, typically adopted by those employers seeking to manage their pension liabilities more pro-actively than in the past.

Such companies have concluded that it may be in their interests to offer members genuine choice with regard to the benefits built up in the pension scheme. To do this they need to offer them transfer values which properly reflect the underlying benefit. The way to achieve this is to top up the transfer values that can be supported by the scheme to a level which provides members with a real choice about how they want to take their benefits.

Offering people choice carries risk – members need to understand the implications of each of the choices available to them so they can consider if a transfer value and top up represents a realistic equivalent to the benefits offered by the scheme.

Quality independent financial advice is required. It is in the employer’s interest that any choices made by members can be demonstrated to be informed choices and this is a powerful incentive for companies to meet the cost of that financial advice.

There has also been Pension Regulator Guidance related to this issue.

Spence & Partners has built up considerable experience assisting employers and trustees through this complex process and have designed modelling tools to assist with financial analysis and explore ‘what if’ scenarios. We have also designed a process to maintain the required level of independence and freedom from conflicts of interest that such exercises require as well as building links to financial advisers with the required skill and qualifications to implement any strategy agreed.