I received a Guarantee Cash Equivalent (GCE) valuation for one scheme back in March 2018. Since then the FTSE has increased, so my question is -
is it worth letting this GCE lapse and asking for another one (hopefully higher) before transferring it into a pension, or does the GCE value depend on other things than the FTSE (for example, interest rates, changes of policy for providing GCE?)
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Guaranteed Cash Equivalent valuations - getting the best one
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Re: Guaranteed Cash Equivalent valuations - getting the best one
zico wrote:...or does the GCE value depend on other things than the FTSE (for example, interest rates, changes of policy for providing GCE?)
It's very unlikely that the value of the FTSE has much to do with your transfer value at all. As Snorvey says, it's mostly based on interest rates, as indicated by long term gilt yields (which doesn't necessarily mean gilts are the actual investments used), and also a heavy dose of actuarial factors.
You should have or have access to (probably on the scheme's website) the Trustees Annual Report and Financial Statements, which will tell you what the scheme is actually invested in. For example, at the end of the last financial year mine had 0% in UK Equities (down from 5% the previous year), 13% in international equities and 46% in a Liability Driven Investment strategy, with the rest being made up of various forms of debt, credit, bonds and cash.
Also, take note that many scheme's only allow one free cash equivalent valuation per 12 months. If you want another before then they charge: mine is £250+VAT.
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