Glossary · UK
What is Transfer Value (CETV)?
The lump sum a defined benefit pension scheme would pay to a receiving scheme if you transfer out -- reflecting the capital value of your accrued pension rights.
Full Definition
A Cash Equivalent Transfer Value (CETV) is the actuarial value of the benefits accrued in a defined benefit (DB) -- or final salary -- pension scheme, expressed as a lump sum that can be transferred to another registered pension scheme or personal pension. The CETV is calculated by the scheme actuary and is influenced by: the member's age and health, the amount of pension accrued, the scheme's funding level, prevailing gilt yields (higher yields = lower CETV), and inflation assumptions. Scheme members have a statutory right to a CETV quotation at least once in a 12-month period. Once a CETV is quoted, it is typically guaranteed for 3 months. Crucially, any transfer from a DB scheme with a CETV exceeding £30,000 requires the member to take regulated financial advice from an FCA-authorised adviser before proceeding -- a requirement introduced after high-profile pension mis-selling scandals. The adviser must assess whether the transfer is in the member's best interests (it often is not, as DB schemes provide guaranteed income for life). CETVs peaked in 2020-2021 when gilt yields were very low, and fell sharply after 2022 as rates rose. Transferring out of a DB scheme is generally irreversible.