Pension plans - at the click of a mouse
For anyone who doesn't know one end of a retirement package from another, Nic Cicutti test-drives some new software to help you make the right decisions
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Your support makes all the difference.I'm all right Jack. At least that's what the chart on the right says about my pension when I retire. As long as I continue with the same level of (incredibly high) contributions into my employer's occupational scheme between now and the age of 60, I should retire with a minimum of 50 per cent of my final salary.
This is the conclusion of a whizzy new system offered by General Accident Life, the insurer, with the aim of persuading us to increase, or even start, contributing to a pension scheme.
The system works by assessing the different entitlements which people traditionally receive when they retire.
Typically, the most basic level of pension is the basic state pension. Then there is the added benefit coming from the State Earnings-Related Pension, Serps, or the equivalent if you are opted out of Serps.
Most importantly, the computer system also calculates the value of all other pension contributions to date and what they will be worth at retirement. This is done by making a series of assumptions, such as a rate of return of 9 per cent on the pension fund, while earnings rise by 6 per cent.
The system can calculate both money-purchase schemes, where the funds are invested to produce a pension pot which is then used to buy an annuity, or a final salary scheme, where the pension is based on years of service.
Lastly, a similar set of assumptions is made about the value of pension contributions being made by you at present.
The result is the table, which can roughly tell you by how much you are under-shooting in terms of your anticipated pension.
The original system was available from Friends Provident, a mutual insurer taken over by GA Life last year. But it has since been tweaked so that the information is based even more closely on an individual's personal circumstances.
Of course, GA Life could hardly let the occasion pass without at the same time promoting its own personal pension options. These come in the form of a Free-Standing Additional Voluntary Contribution scheme (FSAVC), a pension top-up which is invested and allows you to buy an annuity at retirement.
The final two charts show what you might receive if you invest in a GA Life FSAVC, assuming the same investment returns as before. A choice of two types of FSAVC is given.
Of course you may decide this is not your preferred choice. But even so, it still makes sense to try to discover what the world may look like for you at retirement.
To find out what you might receive at retirement, contact your independent financial adviser, or call GA Life on 0500 100200 and ask for its Target Information Service. Remember, you do not have to buy a GA Life product. Also, you will be asked to supply as much information about your existing pension arrangements as you can in order for the assessment to be accuraten
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