The assumptions used in calculating the projections are:
Investment Growth
Investment growth assumptions depend on the investment funds selected. The assumed annual investment growth for each of the funds available is as follows:
| Investment Fund |
Investment Growth |
Charges |
Net Investment Growth |
|
Managed Fund |
6.4% |
0.5% |
5.9% |
|
Pre-Retirement Fund |
4.7% |
0.5% |
4.2% |
|
SRI Fund |
7.0% |
0.5% |
6.5% |
|
Global Equity Fund |
7.0% |
0.5% |
6.5% |
|
Property Fund |
7.0% |
0.5% |
6.5% |
|
Bond Fund |
4.9% |
0.5% |
4.4% |
|
Index-Linked Fund |
4.1% |
0.5% |
3.6% |
|
Cash Fund |
4.1% |
0.5% |
3.6% |
Further details regarding the investment funds available can be found on the SHPS website. Please note that past performance is not necessarily an indication of future investment growth.
Charges
A charge, currently 0.5% of the value of your fund will be deducted from your personal account each year to cover expenses and investment costs.
Salary Growth
Two different salary growth assumptions are available in the calculator. These are:
SMPI - 2.5% per annum. This is the salary growth used for the Statutory Money Purchase Illustrations(SMPI). The projections included on your annual benefit statement use this figure.
FSA - 4.0% per annum. This is the salary growth suggested by the Financial Services Authority (FSA).
Annuity Rates
This is what it costs to purchase a pension when you retire. The assumptions included in the calculator are based on the current annuity rates available in line with those used in the industry standard Statutory Money Purchase Illustration (SMPI). These factors are subject to revision each financial year depending on market conditions. On retirement the portion of your SHPS personal account remaining after payment of any lump sum that you choose to take will be used to provide your pension income. It will be paid to a pension provider of your choice to purchase an annuity. This is known as an Open Market Option. For a small fee The Pensions Trust can provide you with annuity quotations from a specialist annuity broker or you can use your own adviser.
The annuity factors used in the projection allow for a pension that is payable monthly in advance and guaranteed for 5 years and payable for the lifetime of the pensioner after that. If a survivor’s pension is selected this pension will be 50% of the member’s pension payable on the death of the member. All pensions payable are assumed to increase in payment in line with price inflation, up to a maximum of 2.5% each year.
The calculator assumes that you will remain a contributing member of the SHPS defined contribution section up to the stated retirement date and that contributions will continue at the same % rate of pensionable salary throughout.
Data Protection
The Data Protection Act 1998 is designed to give individuals rights and protection in respect of the use of personal data concerning them. The Pensions Trust respects your personal information and undertakes to comply with all applicable data protection legislation.
To view the SHPS DC Projection Calculator click here.