Reviewing your annual pension statement

The first page of this section shows what happened to your pension savings in the previous year to 5th April. We start with how much was in your pension savings accounts at the beginning of the year, add in whatever has been transferred or paid into your pension savings over the year, and subtract any money transferred out in that time. In addition, the value of your investments may have gone up or down over the last year, and that is shown as the ‘investment performance after charges’. This is often a positive figure but can be negative if the value or your investments has simply gone down, or the investment growth is less than the charges for the year.

The page after that shows you a forecast (or estimate) of how your pension savings might grow in the future, adjusted downwards to allow for the effects of inflation - this is so you can compare the forecast monthly income with your income today, and consider what that can buy in today’s prices.

The value ‘Your pension savings could be equivalent to’ in the future (shown in the first blue bubble)  could be more or less than the current value, or even zero if the charges, inflation, and any money moved out of your pension accounts is more than the investment growth and any contributions you may have made. However, if you also have drawdown accounts held with us, then remember these will also be available to provide income for you, as detailed in the pension drawdown annual statement in green.

Some more information about the forecast assumptions (educated guesses) we have used is shown below.

The first page of this section shows what happened to the investments in your pension drawdown accounts in the previous year to 5th April. Similarly, we start with how much was in your pension drawdown accounts at the beginning of the year, add in whatever has been transferred or moved in over the year, and subtract any money transferred or paid out to you in that time. In addition, the value of your investments may have gone up or down over the last year, and that is shown as the ‘investment performance after charges’. This is often a positive figure but can be negative if value or your investments has simply gone down, or the investment growth is less than the charges for the year.

The page after that shows you a forecast (or estimate) of how long your drawdown savings might last in the future, adjusted downwards to allow for the effects of inflation - this is so you can compare the forecast income with your income today, and consider what that can buy in today’s prices:

1. If you are currently receiving regular taxable income: we show you how old you are likely to be when the first pension drawdown account runs out of money (shown in the last green bubble). If you have other pension accounts held with us, then these will also be available to provide further income. 
2. If you are NOT currently receiving regular taxable income: the value ‘Your drawdown savings could be equivalent to’ in the future (shown in the first green bubble) could be could be more or less than the current value, or even zero if the charges, inflation, and any money moved out of your drawdown savings is more than the investment growth and any money moved in. However, if you also have other pension accounts held with us, then remember these will also be available to you.

We assume future contributions continue to be made up to, but stop at, the retirement age as set out in your statement. If you have a regular savings plan set up, we assume that your contributions will continue at the same frequency and amount. We assume that they will not increase in the future, additionally, if you have more than one account we will add together all regular contributions. (The effects of inflation will mean these contribution amounts will be worth less over time unless you increase the amount regularly.)

If you do not have a regular savings plan set up, we assume no further contributions are to be made.

The projection takes into account tax relief in respect of future contributions (these are reclaimed from HMRC and credited to your account). Tax relief of 20% is applied to any personal or third-party contribution amounts.

As an example, if your selected retirement age for your pension was 65 and you’re currently making contributions of £100 a month, once tax relief is applied, this contribution will become £125 and we will assume that £125 a month is being paid in every month until age 65.

We assume any contributions stop at age 75 as it is not possible to contribute to the Fidelity SIPP past age 75.

Eligibility to invest into a SIPP depends on personal circumstances and all tax rules may change in future.

What you could do to give yourself more money

This section will only appear in your statement if:

• you hold some or all of your investments directly with us, (not through a financial adviser)
• you have not passed the retirement date you have provided us; and,
• you are under age 75

If you have a regular savings plan set up, we total up all of your gross contributions to all of your accounts to determine a yearly total. We then work out the monthly equivalent and then forecast how much additional pension growth this could provide based on the additional monthly contributions from the table below:

If you do not have a regular savings plan in place then we show you how much additional pension and income an additional contribution £100 a month could provide.

Pension Allowances

There are certain limits on how much can be paid into a pension with tax benefits applying. Your annual statement provides information that may help you assess this but should not be considered as a definitive record. Your annual statement does not take into account how these allowances may impact your financial position either now or in the future. This should not be considered as a definitive record of your contributions.

For further information on all the pension allowances and how they could impact your pension and retirement planning please click here.

If you require more detailed information about your contributions, such as the amounts and dates, please call us on 0333 300 3350. We will automatically write to you with these details if you do exceed the annual or money purchase annual allowance in a tax year. 

The returns you may get and how long your pension might last if you take out money will depend on the type of funds you invest in.

We have assumed that you will keep your investments the same and that your future contributions will be invested in line with your existing account instructions.

In your statement we have provided you with an assumed annual growth rate. This rate is based on the average growth of all your investments.

On 1st October 2023, regulations were changed to improve the calculation method used across the industry. All pension companies now use the same method to calculate growth. 

The estimated growth rates used will depend on how much and how fast the value of a fund has changed over the past five years. This is known as volatility. 

The projections are based on the volatility of the funds you’re invested in. They may look different (higher or lower) to those you’ve seen before. 

The values shown may be higher or lower than previous years, but this change does not affect the actual value of your pension. It just reflects that we’re estimating the values in a new way. 

The growth rates assumed are not guaranteed and actual growth rates could be lower or higher.

The following estimated rates show how different funds might grow within your pension savings account (before adjustments for inflation). Where fund data is not available for the past five years, we will substitute another fund that is as close as possible to the original.

The following estimated rates show how different funds might grow within your drawdown account (before adjustments for inflation).

Note: the value of investments can go down as well as up, so you may get back less than you invest.

The retirement age detailed on your statement is based on the age you have previously provided.

If you are over this retirement age then we assume you will retire at age 75.

If you are age 75 or older we assume your retirement age to be in 5 years’ time, i.e. if you are age 77 we assume age 82 and if you are age 83 we assume age 88.

Once you reach the age of 55 (57 from 2028) you are generally able to begin making withdrawals from your pension.
While there are several ways to take an income from your pension, we’ve assumed that your monthly income would come from an annuity – a guaranteed income for the rest of your life.

You can find further information about all your options here

Your income in retirement

Pension money cannot normally be withdrawn until age 55 (57 from 2028). If you are over the age of 55 and have already made a withdrawal from your pension, then the information we provide to you will depend on how you have chosen to begin taking money from your pension. If at this stage you have only taken some or all of your tax-free cash, or are taking lump sums (either taxable amounts from your drawdown account or as an uncrystallised funds pension lump sum (UFPLS)) we assume your future income might come from an annuity at a future date.

If you are receiving a regular income from drawdown then we provide information about how long your pension might last based on the withdrawals that you are making and using differing growth rates. We assume that your withdrawals remain the same every year and do not increase. If you have more than one drawdown account, we will confirm the earliest point at which one of your drawdown accounts is expected to run out of funds. We also show you how much you get from a guaranteed income (annuity) now so you can compare (see below for details of the assumptions used to provide that).

We have used the following basis to calculate the guaranteed income that might be payable to you:

• Single life (there is no income provision for a spouse or partner after your death)
• Your income will remain the same each year and not increase
• A 5 year guaranteed period has been included. This guarantees income will be paid for a minimum of five years, even if you die during that time
• You are a non-smoker and in good health
• Your income will be paid monthly (like a salary)

The cost of buying an annuity at the point you want to set up an income will depend on the rates available at that time and may be different from the assumptions that we’ve made.

If you were to select an annuity on a different basis the income figure shown would be higher, or lower, depending on the annuity basis selected. For example, choosing a joint life annuity (to pay an income to a spouse or dependant after your death) would reduce the annuity income figure shown. Depending on your health/lifestyle the income you may be able to get could be higher.

Before taking any money from your pension you should shop around to find a product that is suitable for you.

You can normally take up to 25% of your pension savings as a tax-free lump sum at the point you access them.

The estimated monthly income shown in the bubble in the section titled ‘looking ahead’ assumes that you do not take a tax-free lump sum. However, as many customers do take the tax-free lump sum, we have also provided you with a projection of the lump sum that you could take assuming you took the full 25% tax-free lump sum as well as the income you could get (which will be lower).

Inflation effects the costs of goods and services each year. This means your income will probably buy you less in the future than it does today.

We have allowed for the effects of inflation in your projections by assuming a rate of 2.0% a year. In reality inflation rates fluctuate, and this will affect the value of your pension and any associated income.

As an example, the value of a £10,000 cash deposit in an account paying 0% interest would be affected by a 2% annual rise in the Consumer Prices Index. In five years’ time, the money in the account would only buy what £9,057 would buy today.

Any pension-sharing order is included in your future pension estimate.

If you require more information then please contact us.

Charges impact the returns on your pension and therefore effect the amount you may get back in the future. We have taken the following charges into account when projecting your account value forwards:

• Investment charges set by the company managing your funds (known as ongoing fund charges)
• Rebates that reduce the ongoing fund charges you pay
• Dealing charges
• Fidelity’s service fee
• On-going adviser fees
• DFM (discretionary fund manager) fees

We have not made allowances for any other fees within the projections in your statement, such as transaction fees or the quarterly investor fee. As charges impact the amount you might get back in the future, the amounts shown may be less if the actual charges you pay are higher than we have allowed for.

You can find out more information about our costs and charges here. You can find details of all the costs and charges you have incurred by logging into your account.