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Calculating Your Final Pension Fund Value

27/10/15 Retirement Ready

When first meeting with clients we often find they have no real understanding of their total final pension fund value. Without this information, it is impossible to calculate what their income in retirement may be. 

Unfortunately, some clients are shocked to learn how little their carefully invested funds will actually deliver in retirement. In this post, we cover how to calculate a final pension fund value and provide some tips on how to deal with any shortfall.

Your Pension Funds

You may be paying into your own personal pension plan or you may be in a company scheme where you, and your employer, both make contributions. It may be that you have left pensions behind as you changed employers. You may be in a final salary pension scheme. Whatever the position, the first step in any retirement planning exercise is to establish exactly how many pension plans you have contributed to over the years and their terms and value.

For current schemes, it should be relatively easy to find the yearly statements your pension scheme will provide. Pensions you have left behind can be more of a problem. Pensions are long-term investments and finding the documentation that you filed away years ago can be an issue. 

You may have moved without informing the pension provider or your original pension provider may have changed their name or merged with another company. Mistakes happen and you could have been missed off the providers lists. Fortunately, there is a government website to help. It will provide you with details of the scheme administrator and how to contact them.

Calculating Pension Fund Value

For defined contribution/money purchase schemes (be they personal or company) the first step is to add up the value of your pensions and calculate your total forecast pension fund value at retirement.

Next, you will need to estimate how much you and/or your employer will contribute to your current scheme going forward. Then arm yourself with a pension calculator and get started.

Add in your state pension forecast and the value of any final salary pensions you may have and you will have all of the elements needed to project your income in retirement. 

Everyone’s individual requirements for retirement are different. What are your plans for retirement? What monthly minimum income do you need? You will need to set aside some time to consider your options. If you are nearing retirement it may be best to obtain some professional retirement advice.

If there is a gap between what you have and what you aspire to there are several potential options. You may decide to consider ways to increase your retirement pot including continuing to work while taking a pension (full or part time).

Should the above raise any questions please give us a call or open a Chat and we will be happy to help. If you would like to arrange a retirement review or a call back simply complete the form below and we will get back to you as soon as we can.

 

This blog is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investment or course of action. The past is not a guide to future performance. The value of investments can go down as well as up and you may not get back the full amount you invested. Tax and financial regulations can change. Any figures quoted above are correct at the date of publication.