What is a Pension Forecast?
Obtaining a pension forecast from an independent financial adviser or other party can be an invaluable way of checking if you are on track to realise your desired standard of living in retirement.
Pension forecasting can take account of inflation and other variable factors affecting your pension savings, and give you an idea, not only of the likely pension fund you will have built up at retirement, but also of the real buying power of that sum, once it translates into a regular retirement income for you.
Get a pension forecast from our advisers by calling 0800 678 5929 or submit a pension enquiry online
It must be borne in mind, however, that any steps taken to forecast pension entitlements must necessarily make certain assumptions about inflation levels and savings growth, and for that reason is an estimate based on the situation at a specific time. It may be prudent to repeat the pension forecast process at a later date, to forecast pension entitlements as the date of your planned retirement approaches.
Pension Forecast for the Basic State Pension and other benefits
Forecasting pension entitlements from the Basic State Pension and State Second Pension is a useful first step towards knowing how much you will have to live on in retirement – particularly if you have no occupational or personal pension.
The government offers pension forecasting for both these benefits through the Pension Service.
As your entitlements to the Basic State Pension will depend on the number of qualifying years of National Insurance contributions you have made, it is essential to have the Pension Service check your details as contained in your personal NI file. It is possible, based on this knowledge, to buy extra entitlements under the state pension scheme, that will increase the income you receive on retirement, for example. A pension forecast will enable you to see how much of an increase you can achieve.
The full Basic State Pension in 2010/11 is £97.65 for a single person and £156.15 for a couple. However, these are maximum amounts, and if you have less than the full requirement of National Insurance contributions, you stand to receive less than this. A pension forecast will let you know where you stand, and enable you to take action now to increase your retirement income, or make additional investments as necessary.
Pension Forecast – Occupational and Personal Pensions
Forecasting pension entitlements for occupational or company pensions can be done by a qualified independent financial adviser, or through your employer.
If you wish to forecast pension income from a personal pension, this can be done by your adviser, or by making a request to your pension company. A pension forecast done by your adviser can go further, however, by predicting additional income from your savings, investments and other assets.
Try our pension calculator to work out your pension pot needs for retirement
Pension Forecast – special considerations
There are a number of additional considerations your financial adviser can explain, in connection with pension forecasting.
For example, if you are approaching your retirement in less than perfect health, this could influence the type of annuity you buy when you begin your retirement. If you qualify for an enhanced annuity or an impaired life annuity, it can considerably increase the monthly income you can expect in retirement, as you may not be expected to live as long as a healthy person. Your adviser will be happy to inform you of this and other options, when completing your pension forecast.
Speak to an experienced pension adviser on 0800 678 5929
