In 2024, there will be significant changes to the assumptions we use in the Plan’s pension statements.
This means your projected pension (a forecast of your likely income) will change significantly too.
When you come to access your pension savings, you can choose to take your defined contribution (DC) benefits from the Plan in several different ways, including using some or all your DC benefits to buy an annuity (a regular income for life).
Pension statement regulations mean that we must show you what you would receive if you bought an annuity with all your DC benefits at a certain age using specified assumptions. If you did decide to buy an annuity, there are many different types to choose from – what’s right for you would depend on your individual circumstances. And the cost of annuities will depend on many factors when you retire.
Your 2023 annual pension statement
Log in to your online pension account today to see your 2023 annual pension statement.
Heard about Pensions Dashboards?
This is a programme designed to connect you to all your pensions in one place (including your State Pension) from 2026. The changes to assumptions noted
in this article will apply to all pension schemes and will be reflected in the information you will see about your pension savings on these dashboards.
The change
In 2024, the type of annuity the pension projection uses is changing. This is to better reflect the features that those UK pension scheme members who are buying annuities are generally choosing.
Before October 2023 the projected pension we illustrated assumed* that:
- You would buy a joint life annuity (i.e., if you die, your spouse/partner/dependants would receive a pension equal to half of your pension) and
- The pension would receive index linked increases each year.
For your next statement in 2024, the projected pension we illustrate assumes that:
- You buy a single life annuity (i.e., if you die, your benefit stops) and
- Your pension would remain the same amount each year whilst in payment.
This change means that your projected pension in your next annual benefit statement will likely be significantly more than in your 2023 pension statement because the annuity rates are lower than last year. In fact, this could be more than double your last quoted pension.
*Other assumptions apply.
But not everything else is equal
Pension statements use a range of other financial and investment assumptions. These change each year, and you may have seen a change in your forecasted income before this year. Your forecasted income will also depend on the funds you are invested in, reflecting the returns earned over the year and the assumed investment return assumptions until retirement.
