Every pension statement is different and each company uses a different set of ‘house’ assumptions but they all have to fall within general guidelines.
1. Projected fund at retirement date
This takes the current value of your pension fund today and compounds it forward at an assumed rate of annual growth (4%-6% usually) incorporating your time until retirement and whether you continue making contributions or not (and at what level).
2. Projected pension at retirement date
The future cash value of your pension is then converted into a pension income equivalent using an assumed annuity rate.
3. The CURRENT VALUE of the projected fund
The future cash value of your fund at retirement is discounted by a notional rate of inflation so you can get an idea of what it would be worth in today’s money.
4. The CURRENT VALUE of the projected pension
Similar to the above, the future projected pension income equivalent is discounted for inflation to give an idea of what it would be worth in today’s money
Kevin
http://www.thepensionstore.ie/ (www.thepensionstore.ie)