How to understand your pension statement
You normally get one pension statement a year – your provider may call this your annual or yearly statement.
Your statement shows:
- how much is in your pot
- an estimate of how much you might get when you start taking your money
- if your pension has any special features, e.g. guaranteed annuity rate
- your ‘selected retirement age’ (the age you agreed with your provider to retire)
- the ‘transfer value’ of your pot – the amount you would get if you moved provider or cashed in your whole pot
Your pension type
Your statement should tell you if you have a defined contribution or a defined benefit pension – or you can check which type of pension you have.
If your statement shows a ‘total plan’ or ‘fund value’, it’s likely you have a defined contribution pension.
You can book a free Pension Wise appointment if you have a defined contribution pension.
If it shows a pension value at retirement which is linked to your salary and length of service with an employer, it’s likely you have a defined benefit (final salary or career average) pension.
You can get help with final salary and career average pensions (defined benefit) at The Pensions Advisory Service
Your statement may use the words ‘scheme’, ‘plan’ or ‘policy’ – this is your provider’s way of describing your pension.
The State Pension
You get a State Pension statement from the government.
Read more about what’s in your State Pension statement on GOV.UK.
Your pension may have a ‘special feature’. This could mean a better deal, like a guaranteed annuity rate. It could also mean a restriction, like an early exit fee.
Special features aren’t always listed in pension statements. Contact your provider and ask if your pension has any special features or arrangements.
You may also find information on special features in the documents you got when you started the pension, or the documents sent by your provider around 4 to 6 months before your selected pension age (known as your ‘wake-up’ pack).
Guaranteed annuity rate
Look for ‘guaranteed annuity rate’ in your statement – especially if you started your pension during the 1980s or 1990s. This means your pension will pay a fixed rate of income. The amount would have been set when you started your pension and may offer better value than annuities available elsewhere.
This is not the same as a ‘guaranteed period’ annuity – one which stops paying at the end of a set term, e.g. 10 years.
Market value reductions or adjustments
If your statement shows your pension is invested in a ‘with-profits’ fund, it could mean it has a ‘market value reduction’ or ‘adjustment’. This means the amount in your pot is reduced in certain circumstances.
Early exit fees
Looking at the transfer value of your pot may help you work out if your pension has an ‘early exit fee’.
If the transfer value is the same as your pot value, it’s unlikely you’ll be charged a fee when you transfer. If the transfer value is lower than your total pot value, you may be charged an early exit fee.