I'm confused as hell. I've had my annual pensions benefit statement. It says - and I'll use round numbers.. Current value is X. Projected final value at current contributions £100,000. This will give you at age 65 an annual pension of £2,100. Now I'm a bit confused. If they can take what I'm paying in and turn it into £100k over the next 20 years they are a fecking genius. However what is confusing me is why then - can't the same people pay me more than 1/38th of the value of my final pot - especially when they will also be able to use the same magic they have to turn nothing into £100k in the first place. On the basis of their calculation - just leaving the 100k in a building society and paying me an equal split - I'd be 103 before the money ran out - and the way I look after myself I'm going to cark it before I claim my pension never mind before I get paid it all. I know the banking industry is corrupt - and we're all being shafted - I'm just intrigued as to whether anyone works in the industry and knows how the hell they make these calculations - because none of it makes any sense to me.
I know nowt about pensions but I'm guessing the £2100 is presuming that you will live for 50 years after retirement; unlikely but techinically possible and you wouldn't want your money running out whilst you were still alive would you? I don't know how much you are paying in but it will add up all the contributions across your life time plus your employer's contribution which, if you started your pension early, could very easily add up to £100k, if not more.
That is a rough quote for an annuity. You use your pot to purchase an annual payment from an insurance company. If you believe you will live longer than 103 then it's a good deal. If not then you can just draw down on your pot as and when you choose. You are no longer required to purchase an annuity by law.
