I hear that UK pensions are paid through annuities, ie the pension
holder cannot receive his/her pension in lump sum, but needs to wait
for yearly payments.
Is there a way to calculate how much would be paid under such an
annuity ?  I realise that this depends on the value of the pension
fund, but I am wondering whether there is a formula

Thanks very much for appreciating my comment below!

Since you seem interested in forward planning, I think you would like
the Pension Calculator on the Financial Services Authority website. Of
course no prediction is perfect, but it should be a useful guide to
the pension you can expect from a particular level of contribution.

The Calculator lets you experiment with putting the entire "pension
pot" into buying an annuity, or taking 25 per cent as a lump sum.
(Under current tax law, you can't take a larger lump sum after
receiving the tax benefits applied to pension contributions.)

When experimenting, I suggest you answer "yes" to the question "Do you
want your pension income to keep pace with inflation?" to get a
realistic figure.

Find the Pension Calculator here:
http://www.pensioncalculator.org.uk/pages/calculator1.php

The FSA explain the assumptions they use here:
http://www.pensioncalculator.org.uk/pages/home.php


* * * *

Remember you are entitled to ask for a forecast of your likely state
pension by asking online here:
State Pension forecast
http://www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp


* * * *

Have you heard of stakeholder pensions? They are a newish idea, where
you can vary your contributions from month to month and still get the
tax benefits available in more traditional pension schemes.

Introduction to stakeholder pensions:
http://www.thepensionservice.gov.uk/atoz/atozdetailed/stakeholder.asp


* * * *

Here are some suggestions for further reading!

FSA general pension information
http://www.fsa.gov.uk/consumer/financial_faqs/pensions/

Government Pension Service "Planning Ahead" 
http://www.thepensionservice.gov.uk/planning_ahead/planning_ahead_homepage.asp

Pension Service
http://www.thepensionservice.gov.uk/resource_centre/personal-pensions-pm4.asp

FSA Guide to annuities
http://www.fsa.gov.uk/consumer/pdfs/annuities.pdf


Hope this helps - and good luck with making your decisions. 
Please ask if you'd like me to clarify anything.

Best Wishes - Leli


Search strategy:

pension forecast
pension prediction
pension calculator

I also browsed through the FSA and Pension Service sites.

You can usually commute 25% as cash ... which is a good idea even if
you prefer an annuity because the income from an annuity bought by you
will be free of tax. (At least, this is what I believe).

Yes there are annuity tables on the web.

However you shouldn't have to wait for yearly payments, you can
usually draw down monthly.

Hi - always nice to see you here on GA!

The size of annuity you get from a particular "pension pot" varies,
depending on market conditions and life expectancy at the time of
retirement. Other things to consider are whether the annuity covers a
spouse, and whether it is inflation-proofed.

Here are some current examples based on a pension pot of £100,000:
http://www.timesonline.co.uk/article/0,,2097-858666,00.html

The following articles are quite helpful and have links to websites
with more information.

http://news.bbc.co.uk/1/hi/programmes/moneybox/2951274.stm

http://money.guardian.co.uk/pensions/story/0,6453,775863,00.html


Hope this helps - Leli

Thank you Leli,
You should put this as an answer so I can pay you

Thank-you very much!

Glad to see you're here again today - Leli