Pension forecast

rizzo_2

Does his sound right to you? If you have a pension pot of £45k, and retire at 65, the monthly pension payment would be £94 per month. Just had hubby’s pension forecast and that seems low to me.

Thanks in advance for any replies.

dunstonh

It is not a forecast. it is a projection.

A forecast is something that is likely to happen.  Projections are synthetic using a range of assumptions that more not reflect reality.

 If you have a pension pot of £45k, and retire at 65, the monthly pension payment would be £94 per month. Just had hubby’s pension forecast and that seems low to me.
1 - its likely usiing a growth rate less than would be expected
2 - it will have a 2.0% deduction per annum to give you a real terms value (i.e. spending power today, not what it will be valued at 65)
3 - it will assume a low annuity rate (usually joint with indexation - a type that barely anyone bought)

£45k at 3.5% (a sustainable draw rate) would be £131pm.   If you accept some erosion to the value then closer to £150pm.  

Audaxer

rizzo_2 said:

Does his sound right to you? If you have a pension pot of £45k, and retire at 65, the monthly pension payment would be £94 per month. Just had hubby’s pension forecast and that seems low to me.

Thanks in advance for any replies.

It's not the case nowadays that you get automatically get an annuity at retirement with a fixed monthly payment. That is still an option, but not a good one in most cases as annuity rates are low. Many people now keep their pension pot invested and have options as to how they take income. You can learn a lot by reading posts on this forum as to how a Defined Contribution pension works and the options available to consider at retirement.

reg091

If it helps. My pension pot is £220K (well, that is the "transfer value" so assume the same thing) and the projection on that is £646 pm. Based on me retiring at 65, which is in seven years time.

Albermarle

dunstonh said:

It is not a forecast. it is a projection.

A forecast is something that is likely to happen.  Projections are synthetic using a range of assumptions that more not reflect reality.

 If you have a pension pot of £45k, and retire at 65, the monthly pension payment would be £94 per month. Just had hubby’s pension forecast and that seems low to me.
1 - its likely usiing a growth rate less than would be expected
2 - it will have a 2.0% deduction per annum to give you a real terms value (i.e. spending power today, not what it will be valued at 65)
3 - it will assume a low annuity rate (usually joint with indexation - a type that barely anyone bought)

£45k at 3.5% (a sustainable draw rate) would be £131pm.   If you accept some erosion to the value then closer to £150pm.  

Welcome back Dunstonh, it's like you have never been away.....