Each year, your pension statement gives you an update on the value of your pension savings. It also gives you an estimate of what they could be worth in future.

On 1 October 2023, the rules for how we make that estimate changed.

How we estimate what your pension savings could be worth

To estimate what your pension savings could be worth in future, we follow rules set by the Financial Reporting Council (FRC), one of our regulators. These rules take account of things like your current pension savings and how they’re invested, what we think will be paid into your pension and when you plan to retire. The rules also consider how your pension savings are expected to grow, using growth rates.

Until 1 October 2023, all UK pension providers set the growth rates used for estimates based on how they expected pension savings to grow over time.

 

New growth rates

From 6 April 2024, all UK pension providers will use one of four growth rates: 2%, 4%, 6% or 7%. These rates replace rates of 1%, 3%, 5% or 7% that applied between 1 October 2023 and 5 April 2024. These rates are set by the FRC. The percentage used takes account of how much and how often the price of your pension investments has changed over the last five years.

All UK pension providers will work out which growth rate to use in the same way.

 

What changes might I see?

The numbers in your pension statements after 1 October might look a little different from those you’ve had in the past, and this latest change could make those differences more pronounced.

What your pension savings could give you at retirement could look higher or lower than before. This is because the growth rate used for the estimate could be higher or lower than the ones used for statements prior to 1 October 2023.

  • If a lower growth rate is used, what your pension savings could give you at retirement could be lower.
  • If a higher growth rate is used, what your pension savings could give you at retirement could be higher.

Keep in mind this only impacts how we estimate what your pension savings could give you. It doesn’t change how your investments will actually perform or how they’re managed. 

 

Your questions answered 

Here are answers to questions we’re often asked about how we estimate future pension values.

  • Does this change mean my pension savings will be worth more or less when I retire?
    The amounts for what you could get at retirement in your statement are only estimates. How much your pension savings will actually be worth when you retire depends on several things, like how much you and your employer pay into your pot, the charges on your pension, and how your pension grows.
     
  • Does this change mean I’ll get more or less income from my pension savings when I retire? 
    The amounts for what you could get at retirement in your statement are only estimates. How much income you’ll actually get when you retire depends on how much you have saved when you come to retire and how you choose to take your pension savings.
     
  • Will my pension video in my Standard Life pension app show these changes? 
    Yes, your pension video in the app will be updated with these changes.
     
  • Will the online pension tools and calculators be changing to show these changes? 
    Yes, we’re updating our online pension tools and calculators affected by these changes.