- These figures are only illustrative.
- You may also have other sources of income which you are considering using for your retirement.
- This illustration shows, in today's prices, the pension that might be payable on retirement. This means that we have allowed for future inflation to give an indication of how much someone might be able to buy with a pension if it were payable today.
- Your State Pension Age currently depends on when you were born and whether you are a male or female. Please see https://www.gov.uk/calculate-state-pension for calculating State Pension Ages. State Pension Ages are in a transition period where the State Pension Age is gradually increasing towards age 68 and the Tool currently reflects these transitions. The Government has recently announced proposals to link the future State Pension Age to longevity expectations with a review to be carried out every 5 years, and notification of a change to be given 10 years in advance.
- If retirement is earlier than the assumed State Pension Age, your projected income on retiral will not include Basic State Pension.
- If retirement is earlier than the age the pension income entered on the Pension Income page starts then your projected income on retiral will not include that pension income.
- The value of investments can vary from this illustration. As such, these figures are not guaranteed.
- These figures do not take into account any tax that might be incurred if the fund(s) in the pension plan(s) exceeds the Lifetime Allowance. More information can be found in the Tax section below.
- All firms use the same rates to show how funds may be converted into pension income.
- The minimum required to be paid towards a pension may be determined by the product rules of that pension, or by your employer for company pensions. There is generally no maximum payment, however there are tax implications as described below of paying more than an amount set by HM Revenue & Customs in a tax year or accumulating more than the Lifetime Allowance in total across all your pension funds.
For information regarding the Pension Annual Allowance and the Lifetime Allowance please click here. Tax rules and legislation may change. The value of tax relief may change and will depend on your financial circumstances. The information we have given is based on our understanding of law and HM Revenue & Customs practice at the start of this tax year.
- When determining values in today’s terms, the illustrations assume an annual growth rate of 2.5% after allowing for inflation of 2.5%, and an annual management charge of 1%. A higher (or lower) annual management charge may apply depending on the actual funds your pension is invested in. In addition there may be other product charges, consultancy charges, adviser charges or fund discounts. If the total level of charges after allowing for any discounts is higher (or lower) than 1% then your projected income would be lower (or higher) than the figure shown here.
- Payments into this plan are assumed to increase at 4% each year. Salary escalation is assumed to take place 12 months from today and therefore the pension projection may be underestimated if there is a salary increase before the end of this 12 month period.
- The first pension payment will be paid on the birthday during the year of retirement and will be paid every month from this date until death.
- The pension will alter in line with the Retail Prices Index each year from the time it starts. We have assumed the Retail Prices Index will increase by 2.5% each year.
- We have assumed you are currently exactly six months older than the age entered. This may overstate the pension projection by assuming more monthly payments than actually made and more growth.
- On retirement, you'll be married (if you are in a civil partnership or single the projected income is likely to be different) to someone three years younger than you (if you are male) or to someone three years older than you (if you are female).
- Your spouse will get half your pension after you die.
- We have assumed a single person's allowance for the Basic State Pension on the basis that your spouse is entitled to a full Basic State Pension in their own right. If this is not the case and you are entitled to the full married couple's Basic State Pension, your State Pension would be higher than the figure used.
- Where Basic State Pension is included, we have assumed you have 35 qualifying years for a full Basic State Pension. We have assumed that the Basic State Pension is altered in line with the Retail Prices Index in each future year. We have also assumed that you are retiring after 6th April 2016 and are eligible for the new flat rate state pension. If you are retiring before this date a lower amount will apply.
It should be noted that the Government are considering proposals that would make significant changes to the State Pension.
We have assumed that:
- you have no taxable income at retirement other than the total projected income;
- you are eligible for the standard single person's personal allowance for your retirement age, but not eligible for any other income tax allowances;
- tax rate thresholds increase each tax year in line with inflation in the Retail Prices Index.
- any Defined Benefit pension income changes once in payment are in line with the Retail Prices Index.
- Retirement Planner does not take account of the current differences in personal allowance levels and assumes all ages have the same personal allowance (£10,600 for the 2015/16 tax year, assumed to increase each tax year in line with the Retail Prices Index).