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BA Final Salary CETV’s Soar To New Heights

British Airways fleet might be grounded for the time being but less can be said about their Final Salary Pension.  Since COVID-19 struck back in February the BOE (Bank of England) decided to cut interest rates even further to help boost the economy and aid the recovery.

Flights grounded but pension values soar

As a result interest rates currently stand at 0.1% and this has a significant impact on Final Salary Pensions as they become extremely expensive to maintain.  Because of this when you ask for your CETV in order to review your Final Salary Pension you will be pleasantly surprised.  We have been helping members of Final Salary Pensions for nearly seven years now and more recently have been advising pilots of BA of their options.

You used to be classed as one of the lucky ones if you had a Final Salary Pension, as not every employee was offered this pension plan, and in addition the promise of a rather healthy income for life is a great benefit.  However, you are now still lucky to be a member of such scheme but for a whole new reason.

BA members we have been working with have seen their CETV (cash equivalent transfer values) come in at around 30 x their promised annual income.  To put this in to prospective, the industry standard is a 20 x multiple.  As a result your current valuation will be significantly more and offers you the opportunity to transfer out in to either a SIPP or ROPS.  Also a consideration is that if your BA Final Salary pension is valued over £1,073.100 (which is not uncommon) you maybe liable to pay an additional tax of 55% on any amount above the current UK life time allowance.

Why would your transfer out?

Whilst a pension for life sounds extremely attractive, by transferring out offers many significant benefits.

  • Secure record transfer value
  • Ensure 100% of your pension is left to your spouse or children
  • Benefit from a higher income post retirement
  • Reduce your income tax liabilities
  • Select a currency that is relevant to you. (EUR, CHF, USD) Prevents exposure to future foreign exchange fluctuations
  • Crystallise your BA Final Salary at its current value. Pay no additional taxes on the growth

Example transfer

BA Final Salary Pension


Transfer Out

Todays offer and valuation for a 45 year old. Normal Retirement Age 60 Todays transfer value with a modest return of 5% over 15 years = £1,902.333.54
Promised pension = £30,000 per annum until death Pension with a 5% drawdown on capital = £95,116.67
Spouses pension = £19,800 per annum Spouses Pension = 100% of remaining pension fund. (No death taxes.100% is transferred over to your spouse or chosen beneficiaries)
Todays CETV = £900,000 (estimated transfer value based on 30 x) Although your pension now exceeds £1,073.100 you are exempt of the LTA tax

As you can see from the above table, the potential benefits of transferring out of your current BA Final Salary Pension are potentially significant.  However, that said it is extremely important you speak with a pension expert who has experience with Final Salary transfers as they are indeed a complex case.  You need to obtain a TVAS report (Transfer Value Analysis Service) from a qualified FCA approved advisory firm and there are very few who offer such service.

As an independent advisory company we have partnerships in place with these FCA companies and we can put you in touch with them.  Once you have the TVAS report and advice from SuisseRock and the UK based FCA approved advisor you will have all of the information you need in order to make an informed decision.

Should you decide to proceed with the transfer out SuisseRock can help you every step of the way from the TVAS report, managing your investment and taking income when you retire.  SuisseRock are experts in this field and our team would be happy to assist you. Request your complimentary review by simply completing the below form.

Request your complimentary review

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