Private Pension 'Pot'

Cardew

I know very little about private pensions as the question below might illustrate!

A friend of mine aged 49 next month left the Police in 1997 with 7+ years reckonable service. A letter from the Police pensions department stated her deferred pensionwould be £3,116pa at age 60 in 2028.

Whilst appreciating this is a ‘how long is a piece of string’ question. Is there any way to estimate a ballpark figure of how big a private pension fund ‘pot’ would need to be today to have some degree of confidence that it would pay £3,116pa in 2028. Then inflation linked.

No further payments to be made into the fund.

I do appreciate that a growth rate would have to be assumed.

ajbell

Around £104000 is my guess.
Based on 3% annuity for index linked pension.

jamesd

At the moment the annuity rates for 60 year olds with five year payment guarantees are 4.18% with no inflation linking and 2.78% with RPI inflation linking. CPI that the police pension would use would be somewhere between the two, perhaps 3%. That would take a pot of about 104,000 in 2028.

The value today to get to that in 2028 depends on assumptions for growth after inflation. If I assume 3% growth after inflation the amount needed today would be £73,000.