Contributions calculator

Calculate my future Pension Pot

To help you calculate your future Pension Pot you can access the independent pension calculator on the Money Advice Service website. With a few easy steps their calculator will allow you to find out how much you might get as an income when you retire and works for both defined benefit and defined contributions schemes.

The calculator can be accessed here.

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How much is paid into my Pension Pot?

This is how much money would go into your Pension Pot each month. You benefit from Pearson contributing double what you put in, and tax savings reduce what you have to pay.

This is calculated below.

My monthly contributions into my Pension Pot:

Tax relief means I save:

Actual cost to me:

PLUS the amount paid into my Pension Pot by Pearson:

Total amount paid into my Pension Pot:

How much could my Pension Pot be worth?

The amount of money paid into your Pension Pot, and how long you are a member will affect what you get at retirement. Use the slider below to show how your retirement age affects the value of your Pension Pot as well as your potential annual retirement income should you wish to take your benefits this way. Please remember that the size of your Pension Pot will also be affected by the investment funds you choose. It is really important that you make the right investment choices for your personal circumstances and review these choices regularly.

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Pension Pot

Tax-free lump sum

25%
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Yearly retirement income

You can see what effect taking a different tax-free lump sum could have on your Pension Pot and yearly retirement income by sliding the purple circle above.

If you are contributing at the maximum normal rate, you are able to pay more through additional voluntary contributions.

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I have read the assumptions

We hope you find the pension calculator helpful in planning for your future. We cannot predict what will happen between now and when you retire, so in order to provide these figures we have to make some assumptions.

Please be aware the figures produced from the Pension Pot calculator are indicative only and do not constitute an entitlement to benefits from the Plan. You should not use the Pension Pot calculator as your sole retirement planning method. You may want to contact an independent financial adviser for help with your retirement planning.

What we have assumed for the future

  • Contributions will be made by both you and Pearson based upon the percentage of pensionable salary as selected by you, whilst you are an active member of the Plan.
  • You will continue to be an active member of the Plan until your normal retirement age of 62, or other selected retirement age (SRA) you chose in step 2.
  • Your contributions and the Company’s will continue up to your SRA.
  • We have assumed your pensionable salary will increase in line with earnings at 2.5% each year.
  • These figures are shown in today’s prices and allow for how the price of goods and services might increase in future. The assumed rate of inflation is 2.5% each year.

Tax

  • Tax relief is calculated using a tax code of 1185L (i.e. personal allowance of £11,850 per year in 2018/19).
  • Tax bands are based on rates in the 2018/19 tax year.
  • The calculation will factor the reduction in personal allowance for higher rate tax payers.
  • If you are a Scottish tax payer your tax allowances are slightly different and this is not reflected by the modelling tool. 
  • The tax figures do not take into account any additional tax charges as a result of exceeding the Annual Allowance. See here for further information about the Annual Allowance.

Investments

  • The calculator assumes that your Pension Pot is, and will continue to be invested in the default lifecycle option (drawdown lifecycle), and you remain an active member of the Plan. The illustration makes an allowance for the different funds which you will be switched into in the future.
  • The Pension Pot will yield a return of 5.21% a year (after an allowance for expenses) until you are 15 years from your SRA. Over the 15 year period to your SRA, the fund will yield a return reducing from 5.21% a year to 3.89% a year as the lifecycle fund changes your investments as you approach your SRA.
  • Your choice of investment lifecycle does not restrict your options at retirement.

Your benefits when you retire

  • The calculator shows you your options for how you can take your benefits when you retire. If you wish to take your benefits via income drawdown when you retire, you will be able to do so from the total amount of your Pension Pot.
  • The calculator also shows you what you could potentially receive as a yearly retirement income (an annuity). The cost of buying an annuity is based on standard annuity rates at April 2018, which are based on the following:
    • The pension that you purchase at retirement is assumed to increase in payment in line with inflation (assumed to be 2.5% per year).
    • A pension is assumed to be payable to a partner upon your death in retirement at the rate of 50% of that payable to you.
    • In the event of your death after retirement pension payments will be guaranteed for a minimum of five years.
    • A 4% expense loading was also built into the annuity factors provided to reflect the initial cost of purchasing an annuity.

Things to note:

  • The calculator has been built for active members of the MP03 Section only.
  • If you wish to take your benefits via income drawdown when you retire, you will need to transfer your benefits out of the Plan to a drawdown provider. Please note your choice of investment lifecycle does not restrict your options at retirement.
  • If you enter your gross pay into the annual pay box, this may not be the same as your pensionable pay as it may include certain elements, like bonuses, car allowances and holiday pay.
  • The annual pay amount that you enter will determine whether you are a basic or higher rate tax payer. This tax rate will then be used to calculate the amount of tax you receive. The actual tax relief you receive depends on your individual circumstances and may differ from the amount quoted.
  • You can currently start taking benefits from age 55.
  • Your monthly contributions (including additional voluntary contributions) cannot exceed 15% of your pensionable pay. The modeller has been programmed to reflect this. There may be special circumstances where your additional voluntary contributions can exceed this limit.
  • Under the TM1 version 4.2 guidelines the SMPI annuity factors are calculated using an effective date of 15 February. As the factors used within our modeller are the updated factors for 2018/19 these have an effective date of 15 February 2018.

Discounts

Aviva is offering additional discounts to its online premiums for car, home and travel insurance to new Aviva customers.

To find out more go to www.aviva.co.uk/affinities/pearson where you can find details of the products available and any eligibility criteria that may apply.

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