Update to ASP Pen-2, Retirement Benefit Schemes Transfer Values

The Minister for Social & Family Affairs has approved a change in the Society’s Actuarial Standard of Practice on Retirement Benefit Schemes Transfer Values.  The pre-retirement discount rate in the standard transfer value basis set out in the ASP will reduce from 7.75% to 7.5% per annum with effect from 1st March 2010. 

The pre-retirement discount rate is an estimate of the expected long-term rate of return on an equity portfolio.  The decision to reduce the assumed discount rate reflects downward movements in long bond yields and a rise in equity markets since the financial assumptions in the transfer value basis were last reviewed six months ago.

For a typical pension scheme, this change in the transfer value basis is likely to increase the aggregate actuarial value of accrued benefits in respect of the active and deferred membership by approximately 2%- 3%.