Grove Pension Solutions

IFA Newsletter March 2024

Apr 4, 2024 | Pension News

Changing Transfer Values

In our previous Newsletter, we noted a fourth consecutive month of increases to average CETVs based on the Grove Pensions Solutions (GPS) CETV Index. This was despite the Bank of England base rate remaining at 5.25% since August 2023. So far, despite interest rates remaining stable and no decreases on the horizon, we have seen a slight reversal in this with average CETVs dropping over early 2024. However, it is interesting to note that the comparative generosity of CETVs remains fairly high.

Interest Rates

On 21st March, the BofE held the base rate at 5.25% for the fifth time in a row, with the voting of the Monetary Policy Committee and the general outlook suggesting that this will be mirrored at the next review in May. In fact, many economic forecasters are now suggesting that it could be later this year, or even into summer 2025, before we see any meaningful cuts in interest rates.

Bank rate maintained at 5.25% – February 2024 | Bank of England

Increasing Number of Direct-Client Enquiries

In our previous newsletter, we mentioned an increase in the number of ‘direct’ client enquiries and March has seen a further significant increase – with the highest number of direct enquiries for nearly a year. This is indicative of an increase in demand from deferred members, with many clients still motivated by flexible retirement options and / or legacy planning, and unconcerned with the legacy of previous inflated CETVs.

As such, if you have a client that wants to consider a transfer for the ‘right’ reasons, please engage with them accordingly and refer them to us in the usual way.

Two New IFAs to Refer Clients to Grove

In the past few weeks, two new IFA firms, representing 130 advisers, will now be using Grove for all new DB transfer enquiries. In both cases, the firm’s own PTS advisers had been conducting pension transfer business ‘in-house’, however, as part of a de-risking strategy and to reduce PI costs, the senior compliance staff at both firms helped make the decision to outsource this risk to Grove instead.

The Grove Pension Solutions ‘Real World’ CETV Index

The Grove Pensions Solutions (GPS) CETV Index provides an average CETV based on a £10,000 per year pension. This is calculated by analysing the actual CETV and benefit value of thousands of ‘real-world’ CETV’s calculated since July 2022. This is unlike other indexes that use a ‘typical’ CETV based on assumptions.

The Grove Pension Solutions CETV ‘Generosity’ Index

A Transfer Value Comparator (TVC) is the amount a transfer value would need to be at the date of calculation, to match the future benefits from the existing scheme, based on risk free investments. Comparing the TVC against the CETV gives an indication of the relative generosity of the CETV. For example, if the Transfer Value offered by the scheme matches the TVC (100%), this indicates a generous transfer value.

The following chart is based on analysis of thousands of real CETV’s calculated since July 2022.

The Grove Pension Solutions CETV ‘Generosity’ Index