The ABI and FSA launch Government backed Pension Calculator

Today, Secretary of State for Work and Pensions, Andrew Smith MP said:

"Future pensioners should be able to access easily the information they need to plan for retirement. I welcome the introduction of the Calculator and recognise the need for the shared commitment of ABI and FSA in better informing people about pensions."

Using the Pensions Calculator, people can enter key factors (eg the age they will start saving, how much they might contribute and retirement age). The Calculator will then display how much retirement income they could receive. A standardised state pension can be taken into account and the weekly income in retirement will be illustrated in todays money.

Users can change their assumptions (eg save more, start earlier or retire later) in order to show how they may achieve what they consider to be a decent retirement income.

The joint initiative helps meet the FSAs objectives on consumer education and awareness and supports the ABIs work on their five point plan to close the UKs 27 billion a year savings gap.

Consumer trials, carried out for the ABI by Frank Research earlier this year, showed that the Calculator was easy to use and hit home the importance of starting to save earlier in life. Mary Francis, Director General of the ABI:

"Our research shows how much people value a personalised pension illustration. The Calculator should be a wake up call to all of us.

As an independent tool, the Calculator can be used by anyone and will help people decide when and how much to save for their pension. It can be used by someone sitting at home, or when discussing a pension at work."

John Tiner, FSA Managing Director of Consumer, Investment and Insurance said:

"The Calculator will help people understand what their position will be in retirement so that they can make better informed decisions now about if, when and how to save."

The assumptions used by the new Pension Calculator are consistent with the real value projections that have been introduced by the DWP. Customers will start to see these new projections on their annual pensions statement from April 2003

Notes for editors

1. As well as showing the value of different levels of saving, the Calculator will illustrate the impact of the ages at which people start saving and retire. The table below illustrates the different pension incomes which may be produced by regular contributions of 50.

   Weekly private pension income from regular contributions of £50 per month
   Age starts saving	Age of retirement
    	60	65
   20	£60	£88
   25	£48	£71
   30	£37	£56
   35	£28	£44
   Figures based on male, purchasing an RPI-linked, single life annuity.

2. Frank Research conducted consumer research on behalf of the ABI during April 2002. The findings were reported in Insurance Trends, April 2002 and are available from the ABI. Quotes from the focus groups include:

   "So if from when Im 35 I save 50 each month and then retire at 55 this will give me 35 to live on, hmm, not much! Young family man.

   So, now Ive seen this Im thinking that I could be swayed to pay in 80 pre month from now rather than waiting 5 years when I would have to pay in 120 per month for the same income. Pre-family man."

3. The ABI is the trade association for Britains insurance industry. Its more than 400 member companies provide over 97% of the insurance business in the UK. We represent insurance companies to the Government, and to the regulatory and other agencies, and provide a wide range of services to our members. ABI member companies account for more than a fifth of investments in the London stock market. An ISDN line is available for broadcasts.

4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.