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Reviewing your annual statement

Notes and assumptions

Every year we are required, by law, to provide you with an annual statement that provides you with a summary of how your pension accounts have changed over the statement period (which we have aligned to the tax year).

Within this statement we provide certain projections:

  • If you have a pension savings account these projections are intended to provide you with an idea of how much your pension account could grow in the future and how much it could provide you with as an income in retirement.
  • If you are taking income from a pension drawdown account the projection will show you how long your pension might last, based on the amount of income you are taking.

The projections we provide are only estimates and require us to make certain assumptions. The assumptions we use depend on the type of account(s) you have.

Assumptions that we use in order to provide the calculations in your statements

Your future pension value and the income that it could provide may be different from the amounts shown in our projections. There are several factors which could affect the pension you receive, including the following:

  • The date when you start to take your benefits
  • The amount of contributions paid into your account
  • How your account is invested and how much the investments grow
  • Whether you keep your pension invested and take an income from it directly or use some or all of it to obtain a guaranteed income for life when you retire
  • The amount of withdrawals you plan to take

  The pension shown is based on an annuity being chosen but there may be other options available.

Contributions

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 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 invest directly with us and 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 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:
 

Equivalent Monthly Contribution Amount

Additional Monthly Contribution

£0.00 - £499.99

£50

£500.00 - £999.99

£100

£1,000.00 - £1,499.99

£150

£1,500.00 - £1,999,.99

£200

£2,000.00 - £2,499.99

£250

£2,500.00 - £2,999.99

£300

£3,000.00 - £3,499.99

£350

£3,500.00 - £3,999.99

£400

£4,000.00 - £4,499.99

£450

£4,500.00 - £4,999.99

£500

£5,000.00 - £5,499.99

£550

£5,500.00 - £5,999.99

£600

£6,000.00 - £6,499.99

£650

£6,500.00 - £6,999.99

£700

£7,000.00 - £7,499.99

£750

£7,500.00 - £7,999.99

£800

£8,000.00 - £8,499.99

£850

£8,500.00 - £8,999.99

£900

£9,000.00 - £9,499.99

£950

£9,500.00 - £9,999.99

£1,000

£10,000.00 - £10,499.99

£1,050

£10,500.00 - £10,999,.99

£1,100

£11,000.00 - £11,499.99

£1,150

£11,500.00 - £11,999.99

£1,200

£12,000.00 - £12,499.99

£1,250

£12,500.00 - £12,999.99

£1,300

£13,000.00 - £13,499.99

£1,350

£13,500.00 - £13,999.99

£1,400

£14,000.00 - £14,499.99

£1,450

£14,500.00 - £14,999.99

£1,500

£15,000.00 - £15,499.99

£1,550

£15,500.00 - £15,999.99

£1,600

£16,000.00 - £16,499.99

£1,650

£16,500.00 - £16,999.99

£1,700

£17,000.00 - £17,499.99

£1,750

£17,500.00 - £17,999.99

£1,800

£18,000.00 - £18,499.99

£1,850

£18,500.00 - £18,999.99

£1,900

£19,000.00 - £19,499.99

£1,950

£19,500.00 - £20,000.00

£2,000

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. 

Investments

The returns you may get and the length of time your pension might last if you’re making withdrawals will depend on the type of funds you invest in.

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

Within the projections that we provide, we take account of the expected returns from your current investments. The investment growth rates used in your projections are based on Fidelity’s assumptions about how markets might perform in the future as well as taking into account certain limits as set out by our regulators. Whilst these assumptions are informed by historical experience, they involve an element of subjective judgment and are therefore hypothetical in nature. The growth rates assumed are not guaranteed and actual growth rates could be lower or higher.

Within your statement we have provided you with an assumed annual growth rate. This is an effective growth rate based on the average of all your investments. We have assumed the following growth rates (before the effect of inflation or charges are taken into account):

Asset type

Low

Medium

High

Equity funds

2.0%

5.0%

8.0%

Property funds

0.0%

3.0%

6.0%

Bond funds

-1.5%

1.5%

4.5%

Cash & cash like funds

-2.0%

1.0%

4.0%

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

Your retirement age

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 the next 5 yearly birthday, i.e. if you are age 77 we assume age 80 and if you are age 83 we assume age 85.

Your income at retirement

Once you reach the age of 55 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. If you are over the age of 55 and have already made a withdrawal from your pension then the information we provide 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).

Guaranteed income (annuity) assumptions

We have used the followng 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.

Tax free lump sum at retirement

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 yearly 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

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.

Divorce

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

If you require more information then please contact us.

Charges

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

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.

Getting more information

For further information on your pension and for a full breakdown of your transaction history please login to your account.

Help with your retirement planning

Your annual statement and the projections within them are not intended to be considered as investment advice or a personal recommendation regarding your personal retirement planning based on your personal situation. You should not rely on the statement to make your retirement planning decisions.

Pension and retirement planning can be complex, you should speak with a financial adviser or seek guidance if you require more detailed help and information with your retirement planning.

None

You can also speak to a Fidelity retirement specialist to discuss your options for free on 0800 368 6882, Monday to Friday, 9am - 5pm.

For help finding a financial adviser, visit moneyadviceservice.org.uk/directory or unbiased.co.uk If you’d like more information about your pension, please log in to your account.

If you’d like more information about your pension, please log in at fidelity.co.uk or speak to your adviser or intermediary.

Further information about how we form the assumptions

If you have a pension savings account the guidelines for the assumptions used are set by the Financial Reporting Council. You can find out more from the ‘Technical Memorandum’ found on their website: www.frc.org.uk.

If you have a pension drawdown account the assumptions we use are set out by the Financial Conduct Authority.