Pension Audit

Use this Javascript to see if you are on target for a relaxed retirement. This is a very ball park set of maths, the actual math will depend upon your exact circumstances, scheme details etc and anyone using this out of anything other than idle curiosity should consult an IFA for a proper review.

If things look bad, just play with the numbers see what happens if you increase the term ( retire later), or increase your investment.

You will almost certainly be unable to retire at 50 on a good income, but aim at 65 and you will probably find that you can sustain extra investment to pay off then. The problem with early retirement dreams is that you are fighting low annuity rates, a short investment period ( so you lose the impact of compounding), and you MUST allow for inflation in retirement.

You do not have to make any extra investment into pensions, but the assumption is that all investment is in tax exempt areas ( PEPs , Pensions and ISAs). The key thing about Pensions is that you get tax relief on your investment, so you get more in the fund than it costs.

State pensions are excluded from this audit. To see how you stand with State Pensions run this Real Future Value of State Pension Projector.

1) Enter the rate of accrual as 60 for if you are in a 1/60th scheme, 80 if 1/80th etc: DEFAULT=1. Enter 1 if this section not applicable in your case to avoid divide by zero error in other math.

2) Enter the total number of years service you expect to have by the time you want to retire. Set at 0 if not applicable to you:

3) What is your salary as defined by the pension scheme? Normally only includes basic pay, no bonuses or overtime. Set at 0 if not applicable to you:

4) Enter the current value of long term savings. Set at 0 if none.

5) Enter your current monthly savings rate. Set at 0 if none:

6) Enter the number of complete years to retirement:

7) Enter your assumed growth rate, eg 1.09 for 9%:

8) Enter your assumed inflation rate, eg 1.05 for 5%:

9) Enter your desired annual retirement income, ( in todays terms):

10) Enter your expected annuity rate, eg 0.1 for 10%:

Projected Fund:

Projected Pension using your annuity rate:

Projected Fund in real terms,(allowing for inflation):

Projected Pension in real terms using your inflation and annuity assumptions for fund based pensions, with any Defined Benefit pension added:

How does this compare to you desired annual retirement income?

Making sense of the numbers

To assess how much extra to put in. Alter either the monthly amount, or , for single premiums, increase (4). Repeat until the pension is close to your target.
If dealing with an EPP or SSAS the actual rules are more complex, but this still gives a ballpark figure.
Remember that for SSAS schemes the pooling process means that you need to run this for each member to arrive at a scheme maximum.
For clarity, and if you have no existing pensions, you might prefer the Single/Monthly Premium Calculator.

Math note - It assumes, for illustration purposes only, that all funds are subject to a 1%pa fund management charge, and that new investment will be subject to a 5% charge on entry.

JavaScript - if you are running IE3, N3 or higher and this does not work first check that you have enabled Javascript on your browser. Earlier browsers do not all accept Javascript

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