Statutory Money Purchase Illustration (SMPI)

• The assumed future investment returns used in the SMPI (which we use to calculate how much your pension may be worth at your selected retirement age) must now be determined using a new volatility assessment of the investments. This looks at the monthly returns of each investment fund over the previous 5 years.
• The SMPI will no longer show what you could get if you took 25% of your pension savings as a tax-free lump sum.
• The taxable income that you could get from your pension savings must now be shown as an annual amount. This doesn’t increase whilst in payment and won’t be paid to a surviving spouse after your death.

For many people the impact of the change will be relatively small. 

Depending on the fund(s) you’re invested in, you may see an increase or decrease in the overall estimated value of your pension savings. Investment returns and other assumptions we use for calculating projected values may go up or down compared to previous years, but that’s not unusual. 

In a few cases, the effect of the introduction of the volatility calculation in October 2023 could mean the change to your pension projection is more significant than usual (this mainly affects holdings in certain gilt, fixed interest, and property funds). The other changes that are being made due to the revised guidance may impact your SMPI depending on how it has been calculated previously.

Remember that the figures in your SMPI are not guaranteed and are for illustration purposes only. 

Pensions are a long-term investment. The retirement benefits you receive from your pension plan will depend on a number of factors including the value of your plan when you decide to take your benefits which isn't guaranteed, and can go down as well as up. The value of your plan could fall below the amount(s) paid in.

Importantly, you don’t have to take your pension in the form we show in your SMPI.

• You can still choose to have an income that increases whilst in payment or is paid to a surviving spouse when you wish to take benefits.
• You can also normally choose to take up to 25% of your pension as a tax-free lump sum, subject to the overall cap currently set at £268,275 for the 2023/24 tax year.
• You may also be able to leave your pension invested and take a flexible income within your current plan or by transferring to a different pension.

The figures in your SMPI should not be the only consideration you use to make a decision about planning for your retirement. We recommend you regularly review your pension and how it’s invested to make sure it’s in line with your circumstances, objectives or retirement goals. If you don’t know which fund(s) you’re invested in, you can find this in your annual pension benefit statement.

There’s more help available on reviewing your pension or investments on our existing customers pension page. 

If you’re still concerned about the potential impact on your pension projection, we recommend you seek guidance or advice.

• If you’re aged 50 or over, you can visit  Pension Wise. Pension Wise from MoneyHelper is a free and impartial service provided by MoneyHelper, a government organisation. It offers clear and simple guidance (not advice) online, over the phone or face to face.
• You should also speak to your financial adviser before making any decisions based on this information. If you don’t have a financial adviser, you can find one at unbiased.co.uk  An adviser will normally charge for any advice given.