What is a transfer value analysis (TVA)?
When a member of a defined benefit scheme receives regulated financial advice in connection with transferring their benefits, it is a regulatory requirement that a detailed report is prepared by the regulated financial adviser, unless the member is going to crystallise their benefits (e.g. retire) within 12 months of transferring them.
The TVA report is designed to assist the member in deciding if transferring their benefits from an existing scheme to an alternative pension contract is appropriate based on what is known about the member’s personal circumstances.
You should note that the TVA requirements may change as a result of the introduction of the new flexibilities that came into force from April 2015.
What does the report include?
Calculation of the annual rate of growth (critical yield) required to provide retirement benefits equivalent to those in the existing scheme.
A comparison of projected benefits at NRA for the existing scheme and the potential benefits in the new scheme plus a comparison of projected early retirement benefits.
A comparison of benefits payable in the event of death before and after retirement.
Information about the PPF and estimated benefits if the scheme applied to the PPF at the date of the report.
