Notional Transfer Values

At the moment, we ask the defined contribution ceding scheme to provide an NTV.

We do appreciate the efforts these schemes make in obtaining and providing this information to FSCS, but waiting for this information can significantly delay our efficient determination of claims. By adopting an in-house calculation, we can get compensation to customers more quickly.

Different ceding schemes also calculate NTVs in different ways. This lack of uniformity means there are variables in the NTVs being provided to us. FSCS has identified an alternative methodology, which avoids the deficiencies of the current approach.

Using a single in-house calculation when calculating compensation will ensure consistency in approach across FSCS defined contribution pension scheme claims.

We have developed an in-house methodology for calculating NTVs. The NTV of the ceding pension plan is our estimate of the amount it would be worth now if it had never been transferred. This uses 50% of the growth in the FTSE 100 Total Return Index as a suitable default investment return index to estimate the defined contribution ceding scheme NTV.

The methodology will be applied from the point the pension was transferred to the date we use in our calculation. It also makes an allowance for the charges the pension pot would reasonably have incurred during the period.

We’ve carefully analysed the calculation approaches taken by other bodies when developing this methodology. The in-house methodology FSCS has decided to adopt aligns with what is being used in similar contexts.

Any claims that involve customers transferring out of defined contribution pension schemes that are decided on or after 20 November 2026 will be decided using our new in-house calculation methodology.

Applying 50% of the FTSE 100 Total Return could look like this:

• FTSE 100 Total Return Index Value 22/01/2013: 4346.60.
• FTSE 100 Total Return Index Value 30/03/2020: 5215.37.
• Index has grown by c.20% therefore we will assume c.10% (i.e. half).

The total compensation payable to the customer is subject to the maximum compensation limits that FSCS applies under our rules.

Should you wish to bring an appeal against a compensation calculation that relies on our in-house methodology, asking FSCS to instead rely on an externally produced NTV, you would need to provide sufficient information for FSCS to properly assess the accuracy of the NTV, which is likely to include the following:

• Confirmation of the following in respect of the portfolio held at point of transfer-out:
• Funds/investments held e.g. full fund name including share class along with the ISIN/SEDOL number or any other industry identifier.
• Number of units held in each fund/investment.
• Unit price at transfer-out.
• Applicable date for unit price used.

• Information on charges accounted for within NTV:
• Any % based annual product fee/charge applied by deduction of units.
• Confirmation as to whether such charges are tiered or subject to any ongoing variation.
• Any fixed annual or periodically charged product fee.
• Any % based and/or fixed periodic ongoing advice charges applied via deduction of units that was in place immediately prior to transfer.
• Any early transfer penalties or fixed exit/transfer-out fees.
• Confirmation from the previous provider as to the accuracy of the above charges and related information.

• Information on withdrawals accounted for within NTV:
• Dates, amounts and type of withdrawal (e.g. PCLS, income, UFPLS, etc).

• Information on additional contributions accounted for within NTV:
• Dates and amounts of contributions.
• Confirmation from the previous provider of the regular contributions being paid immediately prior to transfer-out.