Important information and assumptions
What the Zurich Retirement Planner does
- The Zurich Retirement Planner provides information to help you choose a retirement option. It does not provide advice and the results should not be solely relied upon. Before you make any financial decision, you should read the other information on this website and the relevant product literature. We recommend you speak to a financial adviser before you make any financial decisions.
- The Zurich Retirement Planner is designed to give you an initial overview and an estimate of what you might receive in retirement. The value of your retirement savings depends on factors such as investment performance, charges and what is paid in. This value can go down which will reduce the amount of pension benefits you can receive in future.
Who should use the Zurich Retirement Planner
This Zurich Retirement Planner is suitable:
- If you have defined contribution pension savings (a pension based on how much has been paid into your retirement savings plan, also known as a money purchase pension). You can add any retirement income you will get from a defined benefit pension scheme (also known as a final salary scheme) in the ‘Explore further’ section. If you are no longer a UK resident, you will need to consider the tax rules of your country of residence. You should speak to a financial adviser to understand the retirement options available to you.
- If your retirement savings, at the point of retirement, are under the Lifetime Allowance. You can read more about Lifetime Allowance and the impact this may have on the tax you have to pay on HMRC. [This link opens in a new window – Zurich is not responsible for the content of external websites]
Who provides the Zurich Retirement Planner
The Zurich Retirement Planner is provided by Zurich Assurance Ltd, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales under company number 02456671. Registered office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX.
About the information you give us
When you give us your age, the Zurich Retirement Planner assumes your birthday is on 1 January.
- You should enter the age you plan to retire. If you don’t select a retirement age, we will assume you are retiring at your state pension age which we have estimated based on your current age.
- Only enter the value of your retirement savings held in defined contribution (also known as money purchase) pension plans when asked to enter your retirement savings. You can add other savings or investments held for example in ISAs, property or shares, in the ‘Explore further’ section. We will assume these investments will be used to top up your retirement income.
- You should enter the amount you (and your employer) currently pay into your pension retirement savings. The Zurich Retirement Planner assumes your salary and the payments made into your retirement savings will increase in line with inflation. The inflation measure we use is the Retail Prices Index (RPI).
- You should enter the amount you think you might need in retirement before tax is deducted. Bear in mind, this amount should be in addition to any other potential income you may have in retirement including the state pension. Find out more about the state pension and what you might get on gov.uk/calculate-state-pension. [This link opens in a new window – Zurich is not responsible for the content of external websites]
How we estimate how much you might have at retirement
The Zurich Retirement Planner takes the current value of your retirement plans, any investments you add and your expected future payments to estimate what you might have at retirement.
This is based on the following assumptions:
- The Zurich Retirement Planner assumes your retirement savings are invested in a typical investment strategy. The actual funds you invest in may differ from this so the actual growth of your investments may be higher or lower than estimated.
- The Zurich Retirement Planner assumes yearly charges of 1.35% if your investment strategy is a typical managed fund and a yearly charge of 0.75% if your investment strategy is a typical lifestyle strategy*. The actual charges you pay in your current retirement savings plan may differ from this amount and result in your savings at retirement being higher or lower than estimated.
- If your retirement savings are in a Money4life scheme, initially we will assume you are invested in the scheme default fund chosen by your employer. If you have chosen your investments, you can select a fund from the range available by using the dropdown box in the ‘Explore further’ section. You will only be able to select one fund so if you are invested in two or more funds you will need to choose the most appropriate. The funds displayed will automatically show the relevant charges. You can find details of the funds and their charges in ‘Guidance on your fund choices’.
- Over time, the cost of living generally increases – this rate of increase is called inflation. So you can see how much your money would be worth in today’s terms, we've reduced the value of your savings at retirement to account for inflation. For example, if inflation is 2.5%, in 20 years, £10,000 will buy only the same as £6,100 buys today.
* A lifestyle strategy automatically switches your investments. When you are far away from retirement, your money is mostly held in investments which have greater potential for growth but also greater risk for falls in value (for example, shares). As you move towards retirement, over time your money is moved into investments which have lower growth potential but are less likely to have wide fluctuations in value (for example, gilts). This is to help reduce the chance of your retirement savings suffering large falls in value shortly before retirement although this is not guaranteed. Please be aware, where we have assumed you are invested in a typical lifestyle strategy, the Drawdown option assumes that when you start taking your chosen income, your money remains in investments with lower growth potential.
How we estimate your results
- State pension is not included in any of the results unless you add it in the ‘Explore further’ section. Find out more about state pension. [This link opens in a new window – Zurich is not responsible for the content of external websites]
- The figures on the results screen are rounded to three significant figures. This may mean the figures do not add up exactly. For example, the cash lump sum and tax figures may not add up to your total retirement savings.
- Future investment returns are uncertain and there is a range of possible outcomes. The Zurich Retirement Planner shows a range of outcomes. By moving the market conditions slider, you can see what might happen to your total retirement savings and the impact this has on the different options. In the middle of the bar, there is around a 50/50 chance you will receive this much income. At the most optimistic end, there is only a 1 in 20 chance your income would be this high. On the other hand, there is only a 1 in 20 chance your income will be lower than the most pessimistic option.
- The results do not take into account the cost of receiving any financial advice, or any specific features or charges that might exist on your plan. For example, if your plan has exit charges, then the income you receive could be lower than shown. For information about the specific features or charges on your plan, you should refer to documentation from your pension company.
We assume the following product information:
The annuity income calculated is based on the following assumptions:
- You are a healthy non-smoker
- You are buying an annuity with the following options:
- joint life (50% of the annuity income will continue to paid to a partner after death)
- 5 year guaranteed period (annuity income will be paid for your whole life, or for the remainder of the guarantee period if you die within the first five years)
- index linked (your annuity income increases with inflation)
The amount of annuity income you get depends on a variety of factors including the options you choose and annuity rates at the time you buy an annuity.
The more options you choose (for example providing an income for someone after you die or protecting your income against inflation), the lower your initial annuity income will be. You also could get a higher income for some types of annuities like 'enhanced' or 'impaired life’ if you have certain health or lifestyle conditions that could affect how long you're likely to live.
For the ‘Explore further’ section
You can adjust the above assumptions in the ‘Explore further>Retirement Options’ section. For example, you can opt for a single life annuity or take off the index linking from your annuity income.
In the ‘What if’ section, for partial annuities, we assume you are buying an annuity with the following options:
- single life
- no guarantee period (your annuity income will stop when you die)
- index linked (your annuity income increases with inflation)
The drawdown income calculated is based on the following assumptions:
- The Zurich Retirement Planner assumes your drawdown pot remains invested in the same strategy with the same charges as described in ‘How we estimate how much you might have at retirement’
- We assume neither you nor your employer makes any further payments and you start taking the yearly income requested. We have provided you with an estimate of when your money is likely to run out if you take the yearly income requested.
- If you are investing in a different strategy or have different charges, then the age when your money is likely to run out could be higher or lower than we have estimated.
The cash lump sum figure is based on the following assumptions:
- We assume you are taking the whole amount of your retirement savings as a cash lump sum. You may be able to take smaller cash lump sums if your pension company and plan allow this.
- The Zurich Retirement Planner assumes you are receiving no other income in the current tax year. The tax figure shown is the minimum amount of tax we estimate you will eventually pay. The actual amount of tax you would have to pay will depend on your personal circumstances and will likely be higher if you receive any other income in the same tax year. For details on how your individual tax will be calculated go to HMRC. [This link opens in a new window – Zurich is not responsible for the content of external websites]
- If you proceed with a cash lump sum payment, the tax code the pension company must use may not be relevant to your circumstances. This may mean a different amount of tax will be deducted. If more tax is deducted than you are due to pay, you'll have to claim any excess back from HMRC. If too little is deducted, you'll have to pay more.
For the ‘Explore further’ section
You can select to take any amount of your retirement savings as a cash lump sum. The Zurich Retirement Planner assumes when you take a cash lump sum your entire retirement savings will be moved into drawdown. This means 25% of your retirement savings can be taken tax-free and the remainder is taxable.
For example, for retirement savings of £100,000:
- You want a cash lump sum of £40,000. £25,000 (25% of £100,000) is tax-free and the remaining £15,000 is taxed as income in that year.
- You want a cash lump sum of £10,000. You can take the whole £10,000 tax-free as it is within the 25% tax-free cash amount.
As we assume your entire retirement savings will be moved into drawdown, you will not be able to take any further tax-free cash.
We assume the cash lump sum is paid in the same tax year as other income shown on screen for that year. However, the actual tax payable will be dependent on your personal circumstances.
- Zurich accepts no responsibility for the projections made and other outputs produced by the Zurich Retirement Planner.
- You are responsible for ensuring any actions you take or advice you receive from others that relies on any information and guidance provided by the Zurich Retirement Planner is suitable in any particular case. It is your responsibility to be aware of the limitations of forecasts made by the Zurich Retirement Planner.
- Zurich reserves the right to correct errors in the Zurich Retirement Planner projections and output that are reasonably obvious errors.
- Where any information supplied by the Zurich Retirement Planner is based on pricing or performance data, the relevant data has been obtained from sources believed to be reliable. Although carefully verified, the completeness and accuracy of data computations cannot be guaranteed by Zurich in all circumstances.