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. Often clients are shocked to learn what their carefully invested funds will actually deliver in retirement. In this post, we cover how to calculate a final pension fund value and provide guidance on how to address any shortfall.
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, the first step is to find the yearly statements that your pension scheme should 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. Fortunately, there is a government website to help but it will only provide you with details of the scheme provider and how to contact them, not details of your policy or its terms. With the details of the pension providers in place, you may contact them all for an up to date statement and the terms of the pension scheme.
Final salary pension schemes are different and may require specialist pension transfer advice but for defined contribution/money purchase schemes (be they personal or company) the first step is to add up the value of your pensions to establish your final pension fund value. The next step is 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 the state pension element (if you qualify) and you have an amount you may expect in retirement. Everyone’s individual requirements for retirement are different but some estimate you will need up to two-thirds of your final salary to maintain your lifestyle in retirement. Set aside some time to consider your options. There are several alternative types of pension to consider. You may decide you should consider ways to increase your retirement pot including continuing to work while taking a pension (full or part time).
Should you need any help with calculating your final pension fund value then call us on 0800 043 8341 or Email firstname.lastname@example.org. Or to arrange a call back at your convenience please complete the form below.
The information in this article does not constitute financial or other professional advice.