Fund has gone up but estimates have decreased, trying to understand.

isayhello

Hi,

I've asked a few questions but trying to put them in their own threads instead of jumbling them.

I've just started to understand more about pensions and my own that I have through work, one thing that's confusing is I have a fund value which year on year is increasing on my statements but another figure of "estimated yearly payout" has decreased a few times.

What could cause this? as the fund is increasing at a steady amount.

Thanks

Novice_investor101

Usually, the estimated value/payout at retirement age takes into account inflation & then gives you the figures "in today's money". Look further down the statement & it should give you a higher figure for the estimated value (without inflation) & explain the assumptions they are using to estimate the retirement figures.

dunstonh

Projections are based on assumptions. Those assumptions have moved frequently over the years. Largely going from a position that likely overstated returns a bit to one that now likely understates returns. Plus, previously inflation was not considered, but now it is.

So, one year your statement may have said what you get if it grows at 7% a year. Then next year the projection rate could be 5%. Now it could 2.4%.

All projections are just examples using assumptions. Unless you know the assumptions, the projection is likely to be useless.