Chapter 18, Section 8.3, Page 57 The core reading states the approach of using a transfer value calculated at the Transfer Date gives "a larger transfer value if salaries of the transferring members increase in the interim period." My expectation is that if the transfer value is based on a past service reserve approach it will allow for expected increases in salary to NPA, including over the participation period where it is calculated as at the completion date. Therefore I would expect the approach described in this section will only give a higher TV than if it was calculated at the Completion Date if salary increases are higher than expected over the period. (And even if the transfer value is only based on leavers benefits, salary growth over the participation period would need to be higher than the statutory revaluation on the deferred pension over the participation period.) Am I incorrect, or have I misunderstood the core reading?
Salary incs over participation period Hi Dee22 You are quite right, it is the increase over and above what was expected over the participation period that will probably be of greater interest. A sensible comparison may be against the expected salary increases if a past service reserve approach is used and the deferred revaluation assumption if a leaving service benefit approach is used. I think the reason the Core Reading didn't go into this level of detail here is to keep the "flow", as it is a different point that is being emphasised... ...namely that under this "transfer value at transfer date" method the Vendor could see the transfer value they have to pay to the Purchaser significantly increased simply because the Purchaser has decided to award high salary increases in the participation period. The Vendor may quite rightly see this as unfair. I hope that this helps. Best wishes Stuart
