Pension Income – How Much Will You Get?
There a number of factors to consider when attempting to identify pension income and these include working out what a private or company pension will be worth on retirement, any State Pension that will be received and any savings and investments the person has.
Finding out what a pension will be worth on retirement can be a difficult task depending on the type of pension that they have. If they have a final salary pension which is provided through an employer scheme this task is fairly simple as they will receive an annual pension forecast informing them of what they can expect to receive upon retirement if their contributions and salary stay around the same level. The difficulty with this lies in the fact that many people will receive pay increases during their working life and thus end up making a higher contribution into their pension scheme. This means that the forecast can only be taken as a general guide and cannot be taken as fact.
Establishing Pension Income
If a person has a personal pension or are part of a money purchase scheme through their employer then estimating what pension income they may receive can be a more difficult undertaking. This is due to the fact that their money is invested in funds and what the pension ends up being worth depends on how well these funds perform. People who have these types of pensions can request a valuation of their pension and most can be worked out to provide a general guide. This is because of the fact that when their contributions are invested into funds, they are invested in to a large number of them. This means that if a certain fund is not performing well then this is usually counterbalanced by another fund performing well.
The government has also made it simple for a person to identify their pension income from a State Pension as even with the changes this pension is currently going through people can request an estimate on what they may receive in retirement. They also have an online calculator available for people to enter their details into and receive an estimate instantly. This again is not going to be completely accurate by the time a person retires as they may have saved more or less than they originally thought they would, or their circumstances may have completely changed and they may be entitled to more payments and benefits than were first quoted.
Given all of this information, identifying pension income is still an important step to take as it helps to plan for retirement and if there is a possibility of paying more into a private or company pension then identifying a pension income will help the person decide if this is a necessary step that they need to take in order to have a healthy income upon retirement. People must also take into account any savings and investments they may have, as these may affect certain benefits that they would otherwise be entitled to receive. Not taking these into account can lead to pension income being worked out at a higher rate, leaving people in a difficult situation when they receive less State Pensios or benefits than they originally calculated.
Our panel of FCA Approved Pension Experts Will Help You:
- Free Initial Assessment of Your Current Pension Funds
- Find Out Your Projected Retirement Income
- Understand The Most Appropriate Alternative Investments
- Find Out How The Latest Pension Changes Affect You
- Release Cash From Your Pension
- Discover The Benefits of Changing Pension Providers