help with pension benefit statement

coxwell

I'm looking at my legal&general pension savings plan benefit for 2011 and am a bit confused, it states if at age 55 my projected benefits at the lower rate would be a fund worth £11,800 which buys a yearly pension of £464 and at the higher rate a fund worth £12500 which buys a yearly pension of £826.

my query is , it appears that a fund worth £700 more gives an extra benefit of £362 per year! how is this achieved?
Surely it would be a good idea to pay in an extra £700 which would payback in less than 2 years.
It seems too good to be true???

wallpaperman

If you look at the small print, you will probably find that the higher projection is also assuming a higher annuity rate as well, which will be the reason for only a small increase in the the projected fund giving a much higher annual pension.

It's pretty much standard across the industry that different growth rates projected will also assume different (higher) annuity interest rates as well.