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Pension Access

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Our pension income calculator assumptions

Thank you for using our pension income calculator. We've made a number of assumptions to estimate your results.

Guaranteed income for life - Annuity

  • The figures are based on a standard lifetime annuity product and will pay a guaranteed amount for life.
  • We've assumed a flat rate of income that won't increase over time, until you die, with no added death benefits. Any inclusion of these would reduce the income you receive.
  • Annuity rates available in the market may differ significantly and can also vary based on personal circumstances.
  • The figures shown aren't guaranteed and may be higher or lower.

Income as and when you want it - Drawdown

  • We've assumed that when you retire you take your 25% tax free lump sum and an income of 6% a year from the remaining fund. For example, if your fund was worth £80,000 you would take £20,000 as cash and from the remaining £60,000 you would take £3,600 a year. With drawdown you can take an income from a pension fund that remains invested. We've assumed the remaining invested fund grows by 5% each year and have accounted for inflation at 2.5% a year which is deducted from this 5%.
  • We've assumed an LV= annual fund charge of 0.49% for the standard calculations. The actual charge may be higher or lower than this, depending on the investment choices you make.
  • You can see that if the fund is growing by 2.01% a year (5% growth less inflation of 2.5% less a fund charge of 0.49%) and you are taking an income of 6% then the fund value will go down over time. There is no guarantee that this level of income would be sustainable for the whole of your retirement, or life. We have used these figures for illustration purposes only.
  • The figures shown aren't guaranteed, may be higher or lower and are linked to the investment performance.

Guaranteed income for 10 years - Fixed Term Annuity

  • The figures shown assume a flat rate of income for 10 years, wouldn't increase over time, and are guaranteed to be paid to you for 10 years. After 10 years this income would stop and there would be no remaining funds.
  • We've assumed 100% value protection, which means that 100% of the value of your annuity, less any income you've already received, is protected for 10 years. For example, if your annuity was paying you £5,000 per year for 10 years and you died after 6 years, your beneficiaries would receive a lump sum of £20,000 (£5,000 for each of the remaining 4 years).
  • A fixed term annuity can include a maturity value. In this case the income payable during the term will be lower, but there will be some money left at the end. We've assumed no maturity value.

Your tailor made option

It is possible to use a combination of these options, to provide some guaranteed income and some flexibility. We've assumed that after taking your 25% tax free cash, you split the remaining fund equally between drawdown and fixed term annuity. The assumptions we've made for each of these is as detailed above.