FinSight AIGeneral information, not advice. This guide explains how things usually work so you can understand your own documents. It is not financial, legal, tax or pension advice and does not tell you what to do. Rules differ by country and change over time: check the official sources linked here, or speak to a free, impartial service or a regulated adviser.
First: which kind of pension is it?
- Defined contribution (a “pot”), including most workplace pensions and 401(k)s
- Money goes into a pot and is invested. What you get later depends on how much goes in, how the investments do, and the charges. The statement shows the pot's current value.
- Defined benefit (“final salary” or “career average”)
- You are promised an income based on your salary and years of membership. The statement shows that promised yearly income rather than a pot of money.
- State pension or Social Security
- Paid by the government, based on your work and contribution record. It is separate from any workplace pension.
The words on a pot statement
- Pot value, fund value or current value
- What your pot was worth on the statement date. It goes up and down with investments.
- Transfer value
- What you would move if you transferred to another scheme. It can be lower than the pot value if there are exit charges.
- Contributions: yours, your employer's and tax relief
- What was paid in during the year. In the UK, most workers are automatically enrolled, with at least 8% of qualifying earnings paid in, at least 3% of it by the employer. Government tax relief can appear as a separate line.
- Investment growth (or loss)
- How much the investments changed in value over the year.
- Charges
- Fees for running the pot, often a yearly percentage such as 0.5% or 0.75%. Small differences add up over many years, so it's worth knowing what you pay.
- Projected or estimated income
- A forecast of the yearly income your pot might provide at your selected retirement age. It's based on assumptions about growth and contributions, and is often shown “in today's money”, adjusted for rising prices. It's a guide, not a promise.
- Selected retirement age
- The age the projection assumes. A different age gives a different projection.
- Fund or investment choice
- What your money is invested in. Many people are in the scheme's “default” fund.
- Beneficiary or expression of wish
- Who you would like to receive your pension if you die. It's worth checking it's up to date.
US 401(k) and IRA statements: extra terms
- Vested balance
- The part of the account that is fully yours. Employer contributions can “vest” over several years.
- Employer match
- Money your employer adds when you contribute, often up to a percentage of your pay.
- Expense ratio
- The yearly fee charged by each fund, as a percentage.
Free, official places to check and find pensions
United Kingdom
- Check your State Pension forecast (GOV.UK).
- Find a lost pension with the government's Pension Tracing Service.
- MoneyHelper: free, impartial pensions guidance, including Pension Wise appointments for people aged 50 or over with a defined contribution pension.
United States
- my Social Security: see your Social Security statement and earnings record.
- Your plan's summary plan description explains vesting, fees and your options.
Watch out for pension scams
Be very wary of unexpected calls, texts or messages about your pension, offers of a “free pension review”, promises of high guaranteed returns, or pressure to act quickly. In the UK, check a firm with the FCA's ScamSmart before you deal with it.
Decisions about pensions can be hard to undo. Before transferring, cashing in or changing investments, use the free guidance services above or speak to a regulated financial adviser.