How is my pension calculated?

There are different ways in which you can receive your income. It can be by, as we formerly talked about, draw down or it might be by purchasing an annuity where there’s generally a set level of income.

Depending on the pension you have can vary what type of retirement it can give you. A Defined Benefits Pension will give you a set annual income from a certain date, that will all be on the scheme information.  Defined benefit pensions are calculated differently and there are many types of them, these are linked in part to your salary and in part to your length of service with you employer.

A Defined Contribution Pension will be a single pot that you can view and see how it is invested in the stock market. There are calculators out there that will tell you how long that pot will last you. Cash flow modelling can help to ensure that pot lasts you as long as possible.A defined contribution pension is essentially a pot of money based on the amount invested in it over the course of its existence including investment growth over time.