How full is your pension pot?

Anyone who is thinking of retiring early or who is nearing retirement age should ideally know the kind of income they will need during their retirement. Knowing what your pension savings are will enable you to work out whether it’s the right time to retire or whether you should delay taking your pension.

How to estimate your retirement income

If you joined a defined benefit pension scheme, or have a final salary pension then the pension scheme trustees will write to you a few months before you retire advising of how much you will receive. They will also ask you if you want to take any of your pension as a tax-free lump sum.

Between four and six months from your retirement date your pension scheme provider should send you a pack containing all the information about your pension which includes:-How much you have,  the options available to you and how much you could expect if you used it to buy an annuity.

You should also find out how much State Pension you will get. A State Pension is based on the amount of National Insurance contributions you have made and State Pension statement will inform you of this. You can get one here- (In April 2016 the State Pension is changing so depending on your age you may not yet be able to get a statement to estimate your entitlement). Those who are only a few months away from State Pension age will receive a letter advising on how to claim your state pension.

Anyone who is paying into a pension should receive a statement each year giving an estimate of what their pension pot will be worth.

The value of pensions can go down as well as up and you may not get back as much as you put in.