Educational estimate only, not financial advice. Defined benefit pension transfers in the UK are regulated and often irreversible.
What is a CETV?
CETV stands for Cash Equivalent Transfer Value. It is the lump sum value a defined benefit (DB/final salary) pension scheme may offer if you transfer out to a defined contribution pension. In simple terms, the scheme is putting a present-day price on the stream of future pension income you are giving up.
Because a CETV is based on assumptions (interest rates, inflation, longevity, scheme rules, and market conditions), offers can move significantly over time. This calculator helps you estimate a reasonable CETV range and compare it to an offer letter from your pension scheme.
How this CETV calculator works
Inputs explained
- Annual pension at retirement: your expected yearly DB pension before tax.
- Current age and retirement age: used to discount value back to today.
- Life expectancy: how long pension payments are projected to continue.
- Inflation/pension increase: annual growth assumption for pension increases.
- Discount rate: the rate used to convert future payments into present value.
- Spouse/dependant pension: adds value for survivor benefits.
- Guarantee period: modest uplift to reflect minimum payment years.
- Transfer fees: estimates net proceeds after advice and implementation costs.
Calculation overview
The model estimates pension income at retirement, values a growing annuity over the expected payment period, applies spouse/guarantee adjustments, and discounts the total back to today. It then calculates:
- Estimated gross CETV
- Estimated net CETV after fees
- Implied transfer multiple (CETV ÷ annual pension)
Why CETV values can change quickly
- Gilt yields and interest rates: higher yields usually reduce CETVs; lower yields often increase them.
- Inflation expectations: stronger inflation assumptions can increase value for inflation-linked pensions.
- Scheme funding position: trustees and actuaries may adjust transfer basis over time.
- Longevity assumptions: longer expected lifespans increase pension liabilities and may affect CETV offers.
- Scheme-specific rules: early retirement terms, caps, and spouse benefits can materially change value.
Interpreting your result responsibly
A high multiple does not automatically mean a transfer is a good idea. Keeping a DB pension means retaining guaranteed, often inflation-linked income for life. Transferring shifts investment and longevity risk to you.
If your CETV is over UK advice thresholds, regulated advice is typically required before transfer. Consider tax, investment risk tolerance, family circumstances, legacy goals, and income security in retirement.
Common mistakes to avoid
- Comparing CETV only to your first-year pension payment instead of lifetime value.
- Ignoring inflation protection and spouse/dependant benefits.
- Underestimating portfolio drawdown risk after transfer.
- Forgetting total fees (advice, platform, funds, ongoing management).
- Making decisions based on a single market snapshot.
FAQ
Is this calculator exact?
No. It is a planning tool. Your scheme actuary uses detailed assumptions and scheme-specific factors.
What is a “good” transfer multiple?
There is no universal “good” number. Context matters: scheme strength, your health, spouse benefits, tax position, and your ability to manage investment risk over decades.
Should I transfer out of my DB pension?
It depends on your objectives. For many people, keeping guaranteed income is valuable. Always seek regulated advice before taking action on a pension transfer.