About our Pension
Our low-cost, flexible personal pension offers access to funds and ETIs, such as Exchange Traded Products, Investment Trusts and equities, for both pre- and post-retirement planning purposes. It is also available as a Junior SIPP.
Every year we provide clients with an annual pension benefit statement that includes a summary of how their accounts have changed over the previous tax year and how they might grow in the future.
Comprehensive support is available on our advised client website and is referenced in the letter your clients will receive. We have replicated this information below, for your reference.
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About annual benefit summaries
Every year we provide you with an annual pension benefit statement that includes a summary of:
- how your pension account(s) have changed over the previous tax year, and
- how they might grow in the future
This is in addition to the regular valuations you receive quarterly, that cover any other accounts you have with us (such as ISAs and Investment Accounts).
The annual pension benefit statement contains four or five main sections.
Two separate summaries for Drawdown and Savings Accounts
The savings accounts are summarised separately from drawdown accounts as we must show slightly different things for each type of account.
To see how much you currently have in total, you can check the total figure in the summary of investments section.
To get a fuller picture of how much your pension savings might be worth in the future, you should consider your savings and drawdown accounts together.
Pension savings annual statement
Included if you have one or more pension savings accounts. These hold your investments from which you have not yet made any withdrawals.
This section shows (a) how your pension savings account(s) have changed over the previous year up to 5 April and (b) how they might grow in the future.
Pension drawdown annual statement
Included if you have one or more pension drawdown accounts. Once you have reached the normal minimum pension age (unless you have a lower protected pension age), you have the option to take – or ‘crystallise’ – some or all of your pension savings. The minimum age you can normally access your pension savings is currently 55, and is due to rise to 57 on 6 April 2028, unless you have a lower protected pension age. Typically, 25% of the amount you crystallise is taken as a tax-free lump sum. The remaining 75% is then moved to a pension drawdown account, from which you can withdraw further income, which is subject to tax, as and when required.
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Summary of investments
Summary of charges
More information on the summaries
The first page of this section shows what happened to your pension savings in the previous year to 5 April. We start with how much your pension savings were worth at the beginning of the year, add in whatever has been transferred or paid in over the year, and subtract any money transferred out over that time. In addition, the value of your investments may have gone up or down over the last year – this is shown as ‘investment performance after charges’. This is often a positive figure but can be negative if the value or your investments has fallen, or if the investment growth is less than the charges for the year.
The next page shows you a forecast (or estimate) of how much your pension savings might be worth in the future, adjusted downwards to allow for the effects of inflation - this is so you can compare your projected monthly income with your income today, and consider what that can buy in today’s prices.
The ‘Your pension savings could be equivalent to’ figure (shown in the first blue bubble) could be more or less than the current value (or even zero if the charges, inflation, and any money taken out is more than the investment growth and any contributions you make). However, if you also have drawdown accounts held with us, these will also be available to provide an income to you, as detailed in the pension drawdown annual statement in green.
Some more information about the forecast assumptions (educated guesses) we have used is shown below.
The first page of this section shows what happened to the investments in your pension drawdown accounts in the previous year to 5 April. Similarly, we start with how much was in your pension drawdown accounts at the beginning of the year, add in whatever has been transferred or moved in over the year, and subtract any money transferred or paid out to you over that time. In addition, the value of your investments may have gone up or down over the last year – this is shown as ‘investment performance after charges’. This is often a positive figure but can be negative if value or your investments has fallen, or if the investment growth is less than the charges for the year.
The next page shows you a forecast (or estimate) of how long your drawdown savings might last in the future, adjusted downwards to allow for the effects of inflation - this is so you can compare the forecast income with your income today, and consider what that can buy in today’s prices:
If you are currently taking a regular taxable income: we show you how old you are likely to be when the first pension drawdown account runs out of money (shown in the last green bubble). If you have other pension accounts with us, these will also be available to provide further income.
If you are NOT currently taking a regular taxable income: the ‘Your drawdown savings could be equivalent to’ figure (shown in the first green bubble) could be more or less than the current value (or even zero if the charges, inflation, and any money moved out of your drawdown savings is more than the investment growth and any money moved in). However, if you also have other pension accounts held with us, these will also be available to you.
Some more information about the forecast assumptions (educated guesses) we have used is shown below.
Forecast assumptions
We include a forecast (or estimate) of how much your savings might be worth by the time you reach your retirement date. So that this figure is meaningful, it is adjusted downwards to take into account the effect of inflation. Obviously, this estimate is just a prediction using a number of assumptions (or educated guesses).
For pension savings accounts, the guidelines for assumptions are set by the Financial Reporting Council (FRC). For pension drawdown accounts, the assumptions we use are set out by the Financial Conduct Authority (FCA).
The actual values and the income you may receive is likely to be different from the amounts shown in the forecasts for a number of reasons. We cover these below:
The retirement age shown on your statement is based on the age you or your adviser may have provided to us in the past. If you wish to change this, simply speak to your adviser, or log in to fidelity.co.uk/clients. If you have already passed the retirement age originally provided to us, then we assume you might retire at 75. If you are 75 or older, we assume you’ll retire in five years’ time. So, if you are 77, for example, we assume you’ll retire at age 82.
What could happen in reality
You could retire earlier or later than the retirement age we have recorded for you.
What we have assumed
An estimated growth rate is used for the investments you have in each account (before the effect of inflation or charges are taken into account). The rate is based on the types of investments you have in that account.
Investment type | Assumed annual ‘mid’ growth rate, before charges are deducted and the reduction for inflation is made |
---|---|
Equity (shares) & property investments | 5.0% |
Bond & mixed bond/equity investments | 1.45% |
Cash & cash-like investments | 0.6% |
So, the assumed growth rate will be somewhere between 0.6% and 5%, depending on the types of funds in your savings accounts.
If you have drawdown accounts invested in the same investments and percentages, then the growth rate for your drawdown accounts will be the same. If you have different investments and/or percentages, then the growth rate calculated for your drawdown accounts will be different.
In addition, to give you an idea about how your drawdown savings might grow in differing market conditions, we also show growth rates of 3% lower and 3% higher than the mid growth rate, as set out in regulation.
We have also assumed you will keep the same investments and that your future contributions and/or withdrawals will continue as per the current arrangements.
What could happen in reality
The growth rates used in your forecasts are based on Fidelity’s assumptions about how markets might perform in the future as well as taking into account certain limits as set out by our regulators. While these assumptions are informed by history, they are hypothetical in nature and so the actual growth rate achieved by your investments over time may be very different. This could be higher or lower than the mid growth rate used in the forecast and their value may even fall.
In addition, you may change your existing investments over time, which could also affect how your savings might grow.
What we have assumed
Inflation affects the costs of goods and services we buy each year. This means your income will probably buy you less in the future than it does today. As an example, £10,000 in a cash account paying 0% interest could be affected by a 2% annual rise in inflation. If this is the case, then in five years’ time the money would only buy what £9,057 would buy today.
We’ve allowed for the effects of inflation in the forecasts by adjusting the values downward by a fixed rate per year. This means you can compare the projected monthly income with your income today, and what that can buy in today’s prices.
- For pension savings accounts we use an inflation rate of 2.5%, as set by the FRC.
- For pension drawdown accounts we use an inflation rate of 2%, as set by the FCA.
What could happen in reality
In reality, inflation rates fluctuate. This will affect the value of your pension and any associated income and how much it will be able to buy in the future.
What we have assumed
Charges affect how your savings may grow. We take the following charges into account when forecasting your pension values:
- Investment charges set by the company managing your funds (known as ongoing fund charges) and any rebates that reduce the ongoing fund charges you pay
- Dealing charges
- Fidelity’s service fee
- Adviser and DFM (discretionary fund manager) fees
We have not made allowances for other charges such as transaction fees, performance fees or the investor fee within the forecasts.
We have assumed the charges you pay will continue at the same rates.
What could happen in reality
Your charges may be higher or lower in the future.
You can find details of all the costs and charges you have incurred in the year up to 31 March in the summary of charges section.
What we have assumed
We have assumed that any regular contributions you make will stay the same and continue until either the end date you have requested or stop at your retirement date.
What could happen in reality
You could increase or reduce the amount you are currently contributing or stop your regular contributions altogether.
For example, if you increase your contributions in line with rising wages, your savings might last longer than we have estimated.
What we have assumed
We have assumed that any regular instructions to move money from a pension saving account into a drawdown account will stay the same and continue until either the end date you have requested or the pension savings account has run out of money.
What could happen in reality
You could increase or reduce the amount you are currently moving or stop your regular crystallisations.
What we have assumed
We have assumed that any regular withdrawals will stay the same and continue until the drawdown account has run out of money.
What could happen in reality
You could increase or reduce the amount you are currently withdrawing or stop your withdrawals altogether.
For example, if you increase the income you withdraw in line with rising prices, your savings might not last as long as we have estimated here.
If you have other pension accounts, your adviser will be able to set up other withdrawals to provide you with an income from those savings.
What we have assumed
Where you have chosen investments that pay income/dividend distributions, we have assumed they are always reinvested into the fund they came from.
What could happen in reality
Distributions can be kept as cash within your account if you wish. Typically, this cash will be used to pay charges or fund withdrawals.
What we have assumed
We have assumed you won’t make any additional ad-hoc ‘one-off’ withdrawals.
What could happen in reality
You could choose to take ad-hoc withdrawals at any time in the future.
What we have assumed
There are a number of different ways for you to generate a retirement income. Regulations require us to show you what happens if you use your pension savings to buy a guaranteed income for life (an annuity), which is one such income option.
To calculate the guaranteed income that your savings may generate, we have assumed:
- Your income will be paid monthly (like a salary)
- Your income will remain the same each year and not increase
- You are a non-smoker and in good health
- A five-year guaranteed period has been included - this guarantees income will be paid for a minimum of five years, even if you die during that time
- It’s a single life policy (there is no income provision for a spouse or partner after your death).
Before taking any money from your pension you will need to speak to your adviser.
What could happen in reality
You could take money from your pension more flexibly - your adviser will be able to help with what is best for you.
If you did decide to buy an annuity, you could choose different options to these assumptions. The income figure shown would be higher or lower, depending on the options selected. For example, choosing a joint life annuity (to pay an income to a spouse or dependant after your death) would reduce the annuity income figure shown. Depending on your health/lifestyle, the income you may be able to get could be higher.
Also, the cost of buying an annuity will depend on the rates available at the time of purchase and may be different from the assumptions that we’ve made here.
What we have assumed
We assume that when you take money from your pension, 25% will be available for you to take as a tax-free cash lump sum.
What could happen in reality
Most people can take 25% of their pension savings as a tax-free cash lump sum at the point they withdraw money from their pension. However, there are some circumstances where this is different:
- For pension savings accounts opened as a result of a disqualifying pension-sharing order, no tax-free cash is available.
- You have transferred in from older style pensions with some form of protection for tax-free cash, in which case you will be able to take a higher protected rate.
- You exceed the lifetime allowance, and so may not be entitled to tax-free cash on withdrawals over the lifetime allowance.
Your adviser will be able to tell you if any of these apply to you.
For further information on your pension and for a full breakdown of your transaction history, please speak to your adviser or log in to your account.
If we’ve not received tax relief from HMRC for any contributions by 5 April, then this will be included in your statement next year. Similarly, any tax relief received during this tax year which relates to a contribution made in a previous tax year will be included in this statement. You can find details of the transactions on your account(s) and how your pension is invested at fidelity.co.uk/clients.
Contributions made near the end of the tax year may have a different ‘effective’ and ‘processed’ date. For example, if we receive the payment and application on 5 April (effective date) we may not key it on the system until 6 April (processed date). While the contribution counts towards the annual allowance for the earlier tax year, the contribution will show on the following year’s statement.
This can be found on your Annual Benefit Statement or from your adviser.