Pension Forecast Calculator

Enter your years to retirement.

Subtract your current age from your desired retirement age.

If you plan to retire when you can take your state pension, the state pension age is changing and may be different depending on when you were born.

Check your state pension age here.

Enter the total value of your existing pension pots include all defined contribution pensions, this might include workplace pensions from your existing and previous employers and any private personal pensions SIPPS etc that you may have.

Don’t include defined benefit or final salary pensions in this figure as they accrue value differently.

Choose whether you will pay an annual amount or monthly contributions into your pension.  if you have a workplace pension it’s likely that your pension contributions will be taken monthly.

Include the amount that you’ll be paying into your pension. If you are trying to work out how much your workplace pension will be worth then you’ll want to include any employer contributions as well.

How is Pension Contribution Calculated?

If you have a workplace pension then chances are you will be entitled to employer pension contributions.

The changes to auto-enrolment rules mean that from April 2019 If you earn over £512 a month your employer pays a minimum pension contribution of 3%, you as an employee will pay 5%, so you’ll pay a minimum 8% pension contribution in total.

These are the minimum standards set by the government.

You should check with your employer to find out what pension contributions they pay and whether they are linked to your employee contributions, sometimes employers will match your contributions up to a certain amount.

This field is optional but it gives you the option to add an annual increase in pension contributions.  this allows you to account for inflation and/or pay rises.

If you do not wish to make pension contributions every year until you retire you have the option in this field to stop contributing after a certain amount of years.

The calculator will then show you the total value of your pension pot based on the contributions that you plan to make.

Pension pots are invested with the goal that their value will go up over time. How your pension is invested will affect the potential returns that you may get. More aggressive investors will seek higher potential growth in their investments Accepting higher potential risk. Cautious investors will have lower risk but may not achieve such high potential growth.  Balanced investors sit somewhere in the middle.

This pension forecast calculator also lets you see how much your pension pot would be worth if you chose to invest solely in stocks,  bonds or cash and it also allows you to choose your own custom mix of the three.

This calculator is NOT a Monte-Carlo simulator in that it does not generate any fake or random data. Instead, this calculator uses historical data and forecasts against it. Essentially it replays what happened in each of the years in the dataset and then summarizes the results.

For a 30 year savings period, this calculator will run a simulation from 1928 to 1958, then it will run a simulation from 1929 to 1959, then from 1930 to 1960, and so on. In simulations that go beyond the present year, it will wrap back to 1928 and count up from there. In this sense, the effect of the great depression is factored in for early and late starting years.

Each individual simulation computes returns by stepping through the years (eg 1928, 1929, … 1958) and performs the following each year:

• Calculates the change in value in the portfolio.
• Adjusts the annual withdraw amount for inflation based on the CPI (consumer price index) for that year.
• Updates the portfolio balance by adding the change in value and subtracting the withdrawal amount.
• Rebalances the portfolio.

This calculator does not account for investments fees. This calculator does not take into account any State Pension you may receive. Cash figures are based on the Bank of England base rate – interest added annually using end of year interest rate.

Bonds figures 1900 -2014:  Barclays Equity Gilt Study 2016 using the Gilt index, the index has been constructed to represent a portfolio of 15-year par yielding gilts.  In this study, total returns are calculated assuming income is reinvested at the end of the year. Bonds from 2015:  iShares Core UK Gilts UCITS ETF, this Fund seeks to track the performance of an index composed of Sterling denominated UK government bonds, yield reinvested into total return.  The total expense ratio of this fund has not been included to reflect the fact that an investor holding a gilt directly would not pay this charge.

Stocks from 1900 – 2015:  Barclays Equity Gilt Study 2016 using UK Stocks from 1900 – 2015, in this study, total returns are calculated assuming income is reinvested at the end of the year. After 1985 we have used FTSE All-Shares total return See: http://www.swanlowpark.co.uk/ftseannual

Cost of living index uses Barclay’s Equity Gilt Study 2016, UK Cost of Living Index from 1900- 2014. For 2015 and beyond it uses http://www.swanlowpark.co.uk/retail-price-index

Again, this calculator uses backtesting. Past performance does not guarantee nor indicate future results.