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From April 2003 members of money purchase occupational schemes, stakeholder pension schemes and personal pension schemes will start to receive annual illustrations of what their future pension might be.
The money purchase pension illustration will give people an idea of what their future pension might be in today's prices. It will give them a realistic idea of the spending power of their pension, and help them to plan their savings more effectively.
Ian McCartney said:
'This is an important part of the Government's drive to encourage people to think about their pension provision.
'Anyone paying into a pension scheme should have a reasonable idea of the level of pension they might receive when they retire.
'Because the illustration is shown in today's figures, rather than the projected value of their pension, people will be able to see what the real spending power of their pension might be. Illustrations in today's terms discounts the effect of inflation.
'People can plan more sensibly for their retirement with this kind of information. I am very grateful to the Faculty and Institute of Actuaries (F&IoA) for their help in developing the calculation method for the illustration.'
In addition, since October 2001, the Department has been working with employers and pension providers to issue Combined Pension Forecasts to their employees and customers. A Combined Pension Forecast gives a forecast of an individual's state and occupational/private pension.
Mr McCartney said:
'Having this kind of information to hand, helps people to work out how much they need to save, in order to achieve the income they want in retirement.'