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myPlan: Assumptions and Methodology

This calculation tool is designed to provide you with a rough indication of whether your current savings and contribution levels are adequate to support your need for a regular income in retirement.

The primary objective of Fidelity’s myPlan (“the tool”) is to help you identify a strategy for saving to begin to create a plan to address some of the key risks you may face before and during retirement. The tool gather information about you situation and roughly estimates how a portfolio similar to yours may grow over time. The tool allows you to explore changes and see the potential impact they may have on your retirement plan.

Using a number of simple questions, we gather general information about you and provide a rough estimate of the value of your assets and the income they might produce when you retire. However, you should be aware that several factors may have a significant influence on the assets and income you hold in retirement – see ‘ASSUMPTIONS’ below.

The projections or other information generated by Fidelity’s planning tools or calculators regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary with each use and over time.

The results offered by the calculator are not intended to offer investment advice or recommendations regarding your retirement planning based on your personal situation and you should not rely on the calculator to make your retirement planning decisions. The calculator is not a substitute for a comprehensive retirement plan. You should seek financial advice if you require more detailed help with your retirement planning.

ASSUMPTIONS

State Pensions, Provident Funds and Superannuation Schemes

Depending on the laws applicable to the jurisdiction in which you have worked or will work before retirement, you may become entitled to state pensions or provident funds. These benefits may be payable as regular incomes, lump sums or a combination. Such payments will reduce any pension shortfall displayed by this tool. myPlan does not include any calculation or allowance for such benefits.

Investment Assumptions

The calculator’s results regarding the hypothetical accumulation of assets are based on Fidelity’s assumption on how markets will behave in future. The assumptions for market variability are based on historical market performance. This is also used to determine how closely linked the returns from the different asset classes are. However, the market’s past performance does not predict how it will perform in the future, so Fidelity determines forward looking assumptions for the average return on each asset class.

The calculator provides one set of results on the assumption that the markets perform in line with these average assumptions, and another set of results that reflect poor outcomes. It should be noted that the actual risk associated with a portfolio of investments may be higher than the volatility of the underlying asset classes would indicate, due to factors such as the type of investment, the complexity of the underlying assets or a lack of diversification in the portfolio.

Other income in retirement

MyPlan allows you to enter any additional income you expect to receive in - this could be from a defined benefit pension, rental income, or any other source of income you might expect have. Rather than enter a pound value, you enter it as an approximate percentage of your income - to which we will apply earnings inflation, as set out in the section below on your goal. This means that both your retirement income goal, and your other sources of income in retirement, are both working in the same way: as a percentage of your final income before retirement.

Currency

myPlan assumes that the scheme currency and the currency in which you make any other savings (which may be US Dollars, Euros or UK Pounds) is the currency of the country or countries where you plan to retire. If this is not the case, for example you scheme is denominated in US Dollars but you plan to retire in France, myPlan may understate the risk of currency fluctuations to your retirement income.

Your Savings

The tool assumes that any savings you enter continue at the same level. This may not be the case if you change employment before you retire, your employer changes the level of pension provision that they offer, or you decide to increase or decrease your levels of savings in the future.

Annuities

In many jurisdictions, people purchase an annuity (regular income for life) with some or all of their pension assets when they retire. The level of any annuity you can purchase at the time will depend on a number of factors, including the size of your retirement fund, your health and lifestyle choices, and rates available in the market at the time you retire. This tool makes a conservative assumption about annuity rates, however the annuity you receive may be less, or more than has been assumed within the tool.

Inflation and Salary Growth

The calculations provided by this tool are adjusted to reflect the effects of inflation. This is known as “real terms” or “current money terms”. We have made this adjustment so that you can see a retirement shortfall based upon the estimated costs of goods and services when you retire.

To calculate the pre-retirement income, we assume that your salary grows at a rate of 3% per annum. This is based on consumer price inflation (2%, the target inflation rate of the Bank of England) plus the rate by which salary growth exceeds price growth (1%, based on the historical difference between salary and price inflation as taken from National Statistical data).

Source: Fidelity International.

Pensions Taxation

Your pension contributions and benefits may be subject to local tax charges or reliefs in whichever country you are resident and / or hold citizenship in. myPlan makes no allowance for taxation and if you require assistance regarding the taxation consequences of your scheme contributions, fund or benefits, you should contact your scheme administrator or seek local tax advice.

Life Expectancy

The calculator assumes that you live until age 96. This is substantially longer than the current average life expectancy, as you may not be average. We want to ensure that if you live longer than average that you will not run out of assets in your retirement.

Working Life Strategy, or Lifestyling

You should be aware that many pension schemes offer a lifestyling or life staging investment approach under which the risk level of the assets within your pension plan is reduced as you approach retirement. These approaches are designed to protect you from investment market falls seriously reducing the value of your pension fund when you are close to retirement. myPlan does not include any allowance for lifestyling or life staging investment strategies. The effect of a lifestyling strategy might mean that returns are higher or lower that the amount projected depending upon market conditions.

Your Data

Fidelity may collect information automatically when you visit the website, using cookies or local storage in the case of mobile. This allows us to identify your computer and find out details about your last visit but we do not collect any personally identifiable information about you.

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They enable us to measure and understand how visitors use our site, driving improvement.

We might store information entered in tools, such as calculators or demonstrations on our website. This information may need to be temporarily stored to deliver these types of services efficiently and is not used for any other means.