Richard Smith is angry. He has five pension pots but he has no idea what income he will get when from 2027 there’s a default pension he will be able to draw. That is apart from Scottish Widow’s explanation that he can expect £500 pa from the £6,290 he’s saved in the pot.
To make life a little easier for those who read this blog, I’ll save you the quotes. You can download a PDF here
With Standard Life he has £1,193, he’s no idea what income he’s going to get from less than £2k
From Nest he’ll get a pot of £249,005 but there’s no idea what kind of income he’ll get, no idea of when and no idea how his pension will keep up with inflation (nice birds though- just like the ones on the TV adverts.
Then there’s another £236, 500.46 (important those pence), that’s with Aviva but he’s no idea about that as income either.
Finally , Richard has £89, 604.34 in his pot withing the Aon Master trust.
I think most people want to know their pension as an income (they don’t know about the cost of an increasing pension – but they will).
They will want to know what happens if they die – will their family continue to get all , some or none of their pension.
For the mast majority of people, tax is down the line, the nature of the guarantees is down the line and flexibility in terms of taking capital is secondary to the starting point , which is what income they will get from their pension.
Of course Richard is fed up, he wants to be able to know what income he will get at what he considers his retirement date and for that to be consistent across his pots.
Richard of course knows he will be able to see something like that as soon as the dashboard is available, But in the meantime he has done his own dashboard with the dashboard he’s posted on linked in and I’ve posted here.
It is not doing any such thing for him! Nest, Standard life, Aviva and Aon Trust have made no attempt to convert his pot into income , giving him only a pot and leaving the rest to him and anyone he employs to explain what he’s getting.
People do not want it to be hard to see the pension. Most of us have learned how to get our state pension. I dug one out from a few years back. 
Here’s how it’s been updated to Jan 8th 2025
That’s all I want from my private pensions for starters. Sure I want to find out what happens if I delay taking it and I want to know what my partner gets, but this is the starter.
I want things to be easy and like Richard I only get things simple on my state pension statement (which took me less than a minute to access – including unlocking the data).
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I received my Scottish Widow’s with profit pension statement – neither I, nor the former CEO of SwissRe, nor the CFO of Friends Provident, understood it. That said, I don’t understand my mother’s state pension calculation either
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Edmund, I hope that your mother is enjoying the peace of old age and not worrying too much!
My mother is flourishing – but is very cross that she has NO teachers pension. Her claim ‘had to be made within three years of retirement’ after much blanking by the Techers Pension Agency. Who had demanded pay slips from the 1950s… no option but JR@£250,000
Neither ways of describing outcomes have value unless it describes what it will buy. More usefully you could argue for describing pension outcomes as a percentage of average wage or living wage, consider the following points:
Contextualising Pension Outcomes
Understanding Value: Pension statements often focus on absolute numbers, making it difficult for individuals to grasp the real-world impact of their pensions. By relating outcomes to average or living wages, individuals can better understand their financial security.
Benefits of Using Average Wage
Standardization: The average wage provides a common benchmark that can help individuals compare their pension outcomes against a familiar metric.
Income Replacement:
Expressing pensions as a percentage of average wages can show how well a pension replaces pre-retirement income, helping individuals gauge whether their pensions will meet their needs.
Benefits of Using Living Wage
Realistic Living Standards:
The living wage reflects the minimum income required to maintain a decent standard of living in a specific area. By comparing pensions to this wage, individuals can assess whether their income will cover essential expenses.
Local Relevance: Living wages can vary by region, making this a more tailored approach that reflects local economic conditions and cost of living.
Illustrating Purchasing Power
Inflation Adjustment:
Expressing pensions against average or living wages can highlight purchasing power over time, helping individuals understand whether their pensions will maintain their standard of living as costs rise.
Long-term Sustainability:
This method allows for easier tracking of how pensions will fare against changing economic conditions.
Enhanced Clarity:
By framing pension outcomes as a percentage of average or living wages, individuals would gain a clearer, more meaningful understanding of their financial future, making it easier to plan accordingly.
Another assumption to be challenged : Why is the pension supposed to be less than final salary? with more time available for discretionary spending why not target 120% of final salary? If you never try you will never get.
Example
Steps to Calculate
Obtain the Latest State Pension Projection:
Check the current state pension amount. As of 2026, the full new state pension is typically around £203.85 per week (this value may vary slightly, so verify for the most accurate figure).
Determine the Living Wage:
Find the current living wage for a single person. In the UK, as of 2026, the living wage is often cited around £11.95 per hour. For a full-time worker (40 hours/week), this would amount to approximately:
£11.95/hour × 40 hours/week = £478/week.
Calculate the Percentage:
Use the formula:
Percentage=(Living WageState Pension)×100Plug in the numbers:
Percentage=(478203.85)×100≈42.7%
Conclusion
The state pension would represent approximately 42.7% of the living wage for a single person.
Or Richard could have used AI, as I did (and as I think John Mather did), per below.
“My pensions statement says my savings are worth £6,290.43 and I can convert that to an annual
income of £500. Is that correct?”
The £500 a year figure is within the right ballpark for current UK annuity rates, so it is plausible, but you should treat it as an illustration, not a guaranteed rate.
What the £500 implies
• Converting £6,290.43 into £500 a year is an implied annuity rate of about 8% (500 ÷ 6,290 ≈ 0.079).
• Recent UK annuity tables show that a healthy 65‑year‑old using £100,000 can often get around £7,300–£7,900 a year from a level lifetime annuity, which is roughly 7.3–7.9% a year.
• An 8% implied rate is therefore not outlandish, especially for someone in their late 60s or 70s, or if the illustration assumes a simple, level single‑life annuity with limited guarantees.
Continuing with AI:
“My other savings statements add to £576,302.80. How much annual
income can I expect to buy with that amount?”
On current UK annuity rates, a pot of £576,302.80 could roughly buy between about £33,000 and £44,000 a year before tax, depending heavily on your age, health and options (level vs inflation‑linked, single vs joint life).
Rather than be angry, I suggest Richard could be grateful that his savings, when added to his state pension, seem to be capable of providing him with a well above average income in his retirement.
Retirement income must keep pace with inflation throughout your lifetime, not just match today’s expenses.
A pound needed 20 years into retirement will cost far more than today. The challenge is creating sustainable, inflation-adjusted income from finite assets that must last an uncertain lifespan. Describing the benefits in real terms to the beneficiary is the challenge
Transferring risk to others benefits DB members—unless they deliver pathetic below-inflation returns disguised as value-for-money through lower fees.
Traditional fixed pensions erode in purchasing power. The goal: generate growing cash flows that maintain your standard of living until death, while managing longevity risk—outliving your resources or dying with excess unspent wealth (soon subject to IHT).
P.S. AI is a skill we’ll all benefit from using to enhance our thinking and present ideas with greater clarity.