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Summary

Are CETV Values Increasing 2021? A 2022 Report of Year-Round Question

One of the quite interesting things in 2021 is the issuance of a question on Google queries; are CETV values increasing 2021? This question indicates many people are curious and looking for an increase in the value of CETV in 2021.

The year 2021 is indeed marked by an increase in the value of CETV. The rise in inflation and the decline in gilt yields in 2021 are two vital factors related to the growth in the value of the CETV.

The trend of increasing CETV values 2021 continues to grow every month. Interestingly, the increase in Final Salary Pension Transfer Values throughout 2021 was not followed by the rise in transferring DB (Defined Benefit) pension pots to DC (Defined Contribution) pensions.

The global pandemic situation and economic conditions form a general hostile investment climate. In the end, this condition, like it or not, is one of the crucial reasons why many people choose not to leave the DB pension scheme.

Why CETV Value Can Increase in 2021

In fact, the upward trend in CETV will not only occur throughout 2021. Pension Transfer Values 2020 also increased due to many factors. Even since 2016, when the initial wave of transfers to the DB pension scheme occurred, the increase in CETV has continued to climb.

The transfer value of this DB pension scheme is inversely related to the number of gilt yields. Meanwhile, the gilt yields figure is influenced by government policies, as the country’s vital regulator, on several economic factors. One of the essential factors for changes in gilt yields is interest rates.

The value of this interest rate is closely related to how government policies deal with the economic situation. Since the 2008 financial crisis, changes in interest rates have been highly volatile as a form of adaptation to the country’s economic conditions.

The wave of the Covid-19 pandemic will also affect interest rates in 2021. As a result, gilt yields are at a shallow point, which impacts a high increase in Pension transfer rates.

Factors Affecting CETV

As mentioned above, CETV is heavily affected by gilt yields, interest rates, and other external factors related to the country’s economic conditions.

In addition to external factors, CETV is also influenced by many internal factors, such as:

  • Pension age
  • Contract and rules with the scheme provider
  • Life expectancy
  • Marital status
  • The current cost of living
  • Scheme investment costs and returns
  • Annual pension received

The trustees evaluate these internal factors and then relate them to several assumptions related to inflation. The calculation of income is associated with the premise of interest rates and the assumption of return on investment.

CETV Value in 2022

From February to May 2022, the Bank of England did not stop raising interest rates. From 0.25% to 1% and will continue to rise until the following months.

The increase in interest rates is a form of government anticipation of rising inflation. The hope is that the inflation rate can be more controlled by raising interest rates. When there is an increase in interest rates and actions try to influence the value of inflation, the CETV value will be affected.

In December 2021, CETV scores are still high. However, this condition was accompanied by an increase in the value of gilt yields. From January 2022 until now, the value of gilt yields has been slow. The effect is that throughout 2022, the value of CETV will also slowly decline.

As a result, several assumptions and optimism to get a high CETV score had to run aground in the middle of the road. In one of our latest release of YouTube video, our CEO and Independent Financial Advisor, Dominic James Murray, provides a perfect example of how the value of your CETV can significantly change.

Is 2022 the Right Time to Transfer Pension Funds?

This question cannot be answered in general. Each individual has many different and unique factors that influence how pension transfer calculations and policies are carried out.

For that, you need to consult an independent financial advisor to determine the potential value of your CETV and the possibility of making a transfer.

It’s just that, as shown by Dominic, you can’t wait too long while being too optimistic about the CETV value increase. Because, instead of profit, you can actually lose.

Will There Be Another Rise In CETV In The Future?

In principle, CETV can continue to rise. However, no one can answer in exact when CETV can rise as high as in 2021. Some financial analysts discuss the possibility that 2021 is the highest peak of CETV rise that cannot be repeated.

In addition, several problems with the DB pension scheme that occurred in some large British companies, such as Aston Martin, British Steel, and Lloyds Banking Group, recorded a negative effect on the DB pension scheme in general.

What does it mean? As Dominic said, try to be realistic and stop being overly optimistic about a CETV increase like 2021. Some strategies to wait for a CETV increase will feel futile and not give positive results.

Do You Have to Transfer Retirement Funds Right Now?

To be able to answer these questions, you should consult with one of our qualified and experienced Independent Financial Advisors. We recommend this process because your DB pension scheme can be very different from your co-workers or neighbours.

Therefore, Cameron James, as the Pension Transfer Specialist, will calculate and provide several perspectives regarding pension transfers that suit your personal circumstances. The ultimate commitment on whether to make the transfer or not remains in your hands.

However, by having many perspectives and considerations, you can be more confident and confident in determining whether to proceed with the transfer decision or not.

The good news is that you can consult with one of our qualified Independent Financial Advisor for free through the link below. You will get detailed and in-depth prior knowledge regarding your DB pension scheme by doing a free consultation through the button below.

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