Altus’ consultants took an average person earning £29,360 with existing savings of £37,400 at age 42 with pension contributions of 9.4% from salary. The results highlighted a massive disparity in the potential size of the pot at retirement with the most pessimistic provider quoting just over £115K and the most optimistic quoting a little under £370K.
The table below is based on the following scenario details:
current age - 42, retirement age - 67, current salary - £29,360, existing pot - £37,440, contributions employee - 0, contributions employer - 230.
- Contributions were treated as being paid through salary sacrifice so were treated as 100% Employer Contributions.
- Contribution rate was calculated as 9.4% of current salary based on weighted average of combined employee and employer contribution rates published in the ONS Occupational Pensions Survey 2013 published in September 2014.
- Average Salary was based on figures from the ONS Annual Survey of Hours and Earnings.
- Existing pot value was based on calculations of contributions made from age 25 at varying contribution rates, investment growth compounded at 3% and salary growth increasing in line with figures from the ONS Annual Survey of Hours and Earnings.
- Providers chosen from a list of returns from the Google Query Search "Pension Illustration Tool" choosing UK providers only and selecting only providers offering an open service with no registration required.
- Default growth rate represents the rate given as the most likely growth rate by the provider. Where only one rate was shown this was chosen, where a choice of rates was given the mid range or most likely rate was chosen.
- Calculations were all based on a 42 year old male with no dependants or spouse retiring at age 67 with a current salary of £29,360, existing pension savings of £37,440 making contributions through salary sacrifice at a combined employee/employer rate of 9.4% seeking the maximum allowed tax free lump sum and a flat rate income in retirement.