I just had a skim re-read of ch.14 (Discontinuance) and also of GN19. The version of GN19 in the appendix says that in calculating the debt on the employer "the actuarial value of benefits for active members and for deferred pensioners should be calculated using the same basis as the actuary employs in the calculation of CETVs". The core reading in chapter 14 says the payment of any debt aims to ensure the scheme has sufficent funds on the date of calculation to meet the cost of immediate annuities for current pensioners and purchasing deferred annuity contracts for other members. If the debt is calculated in line with GN19, i.e. calculate CETVs for non-pensioners then how can this meet the cost of deferred annuities. A typical CETV would be insufficent to buy a deferred annuity. Have I missed something??
Hi, I think by CETV you are referring to cash equivalent transfer value. My view is that while calculating debt according to GN 19 the actuarial value will be that which will be used to purchase the deferred annuity now( provided it is available in the market.). Moreover whether we calculate debt according to GN19 or take into account the principle as given in the Chapter 14 the actual value to purchase the deferred annuity will depend on when it is purchased. Am I correct?
I'm trying to have a glance at this quickly, but can't find the bit in GN19 referring to the CETV. What paragraph number is it? If it's one of the grey shaded pages then it's a copy of a PREVIOUS GN19 included in GN19 for reference and (I think) applied before the full buy-out debt on employer was required. (if it's paragraph 3.3. of appendix 2 that was valid from 1997 (!) so I think it's a bit out of date now...)
The reference to CETVs was in a "grey shaded" version of GN19 (version 3?). I understand that GN19 had been ammended since then. I don't have my notes with me right now, but is there an up to date version of the GN in the appendix to the course notes (that I obviously missed)?
GN19 as issued includes the previous versions; so while the grey shaded bits are part of GN19 they don't apply if you're doing a new debt on employer calc.
