How to Understand Your Pension Statement and What to Look For
This guide helps you to understand the parts of your pension statement that aren’t always easy to understand. It covers the key figures, what retirement forecasts mean and the checks worth making each year to help you feel more confident about your pension.
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Pension Statement Explained: What You Need to Know
A pension statement summarises information about your pension, including its value, contributions and potential retirement benefits.
Most defined contribution pension providers issue annual statements, although you can usually access updated information online.
The details depend on your pension type:
Defined contribution pensions: Show your pension pot's value, contributions, charges and estimated retirement income.
Defined benefit pensions: Show retirement benefits calculated under scheme rules, often based on your earnings and length of scheme membership.
State Pension: A forecast shows how much you could receive, when you can claim it and whether you could increase it.
You can view your personalised State Pension forecast through the GOV.UK State Pension forecast service.
An NHS pension statement works differently from a typical defined contribution statement. It shows the pension benefits you've built up under the NHS Pension Scheme rather than the value of an investment pot. Members can usually access their Annual Benefit Statement through the relevant NHS Pension Scheme services.
How Defined Contribution Statements Work
A defined contribution pension statement provides a snapshot of your pension savings at a particular date. This includes workplace pensions and many private pensions, such as personal pensions and SIPPs.
Key Information on Your Pension Statement
| Statement information | What it tells you |
|---|---|
| Opening value | Your pension's value at the start of the statement period |
| Contributions | Money paid in by you and, where applicable, your employer |
| Investment performance | Gains or losses affecting your savings |
| Charges | Costs deducted for managing your pension |
| Closing value | Your pension's value at the statement date |
| Retirement projection | An estimate of what your pension might provide in retirement |
| Statement information | Opening value | Contributions | Investment performance | Charges | Closing value | Retirement projection |
|---|---|---|---|---|---|---|
| What it tells you | Your pension's value at the start of the statement period | Money paid in by you and, where applicable, your employer | Gains or losses affecting your savings | Costs deducted for managing your pension | Your pension's value at the statement date | An estimate of what your pension might provide in retirement |
Not every provider presents these figures in the same format. If something is unclear, ask your provider to explain it.
Contributions, Tax Relief and Transfers
Your statement should help you understand how much money has entered your pension during the reporting period.
For workplace pensions, check contributions from both you and your employer. You may also see pension tax relief, depending on how your contributions are arranged.
Three figures worth checking are:
Personal contributions: Do these match your payslips or payment records?
Employer contributions: Are the expected payments being made?
Transfers: Have any pension transfers been recorded correctly?
Tax relief may appear differently depending on whether your scheme uses relief at source or net pay arrangements. With salary sacrifice, employer contributions may also reflect amounts exchanged from your salary.
If figures don't match your records, contact your employer or pension provider for clarification.
Understanding Valuations and Retirement Forecasts
Your current pension value and projected retirement income are two different figures.
Your current value shows what your defined contribution pension was worth on the statement date. It can change as investments rise or fall.
Your retirement forecast estimates what your savings might provide when you retire, based on assumptions about contributions, investment growth, charges and retirement age.
Example Pension Statement: Valuation and Retirement Forecast
| Illustrative pension figures | Amount |
|---|---|
| Current pension value | £80,000 |
| Projected pension value at retirement | £150,000 |
| Estimated annual retirement income before tax | £7,500 |
| Illustrative pension figures | Current pension value | Projected pension value at retirement | Estimated annual retirement income before tax |
|---|---|---|---|
| Amount | £80,000 | £150,000 | £7,500 |
These figures are illustrative only. They are not guaranteed returns or evidence that a particular income will be available or sustainable.
Check whether the forecast is expressed in today's money, whether inflation has been considered, and what assumptions have been used to estimate retirement income.
Checks to Make Each Year
Reviewing your pension statement annually can help you identify changes and decide whether your retirement plans need attention.
Charges and Investment Performance
Check the charges deducted from your pension and how your investments have performed. Investment values can fall as well as rise, so consider performance over time rather than focusing on a single year. If you're unsure about the charges or investments, ask your provider for a breakdown.
Selected Retirement Date and Assumptions
Your statement may use a selected retirement date to calculate projected benefits. Check that this reflects when you hope to retire. An earlier or later date could significantly change the forecast. Also review assumptions about future contributions, investment growth and inflation.
Beneficiary Nominations and Personal Details
Make sure your name, address and contact information are correct. Check any beneficiary nominations, sometimes called an expression of wish. These indicate who you'd like the scheme to consider for benefits after your death, although the final decision may rest with the scheme trustees or administrator. Update your nominations following significant changes in your circumstances.
Transfer Values and Safeguarded Benefits
If you're considering transferring a pension, check its transfer value and whether any valuable benefits could be lost. These might include guaranteed annuity rates, protected retirement ages or defined benefit entitlements. If you're transferring a pension with safeguarded benefits worth more than £30,000 into a defined contribution arrangement, you're generally required to obtain regulated financial advice.
When to Seek Regulated Advice
A pension statement can show your progress, but it doesn't necessarily tell you whether your savings will meet your retirement goals.
Regulated financial advice may be particularly helpful if you:
Have several pensions and want to understand your overall retirement savings
Are concerned about your projected retirement income
Are considering changing your pension investments
Want to combine or transfer existing pensions
Have pensions with valuable guarantees or protected benefits
Need help deciding how to access your pension savings
My Pension Expert's advisers can help you understand your pension arrangements, explore your retirement options and consider a strategy suited to your circumstances.
Frequently Asked Questions
Defined contribution providers generally issue statements at least annually. You may also be able to access updated figures through your online account. Defined benefit schemes have different statement requirements.
Gather your latest statements and record each pension's value or projected benefits. Include your State Pension forecast but avoid treating defined benefit income as though it were an investment pot.
It's an estimate of the income your pension might provide at retirement, based on assumptions. It isn't guaranteed and may change with investment performance, contributions and retirement choices.
Look for an investment breakdown or fund names on your statement. If they're not included, check your provider's online account or request the information directly.
Payments may fall outside the statement period or take time to appear. If contributions seem missing, compare your payslips and contact your employer or provider.
Contact your pension provider to request corrections. Updating your retirement date may also change the projections shown on future statements.
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This article is for general information only and does not constitute financial advice. Pension and tax rules depend on individual circumstances and may change in the future.
