The information that must be provided is information about the business or the businesses proprietor(s). So, if the company is a ‘Limited’ company, the information required is about that limited company. If, based on your company type, you’re required to provide information about individuals (incl. in the case of individuals or a partner in a partnership), then we will need the information relating to those individuals.

The People’s Pension is run by a not-for-profit organisation, People’s Partnership. The Trustee of The People’s Pension has appointed People’s Administration Services Limited as administrator of the scheme. People’s Administration Services Limited is authorised and regulated by the FCA. Read our legal statement for more information.

If you’re a higher rate taxpayer with a taxable income of between £100,000 and £125,140, a pension contribution that reduces your taxable income to £100,000 would give an effective rate of tax relief of 60%. For those on higher incomes, or making bigger contributions, the effective rate would be between 40% and 60%.

Pensions and tax can be complex, so it’s a good idea to get some financial advice to find out what’s best for your circumstances. If you don’t have one you can find an adviser via unbiased.co.uk or moneyhelper.org.uk. You should check the adviser is regulated by the Financial Conduct Authority (FCA) by visiting the Financial Services Register at register.fca.org.uk. This gives you greater protection if things go wrong.

Members who fall under this bracket can however continue to leave their savings with The People’s Pension or transfer out. They should check before doing so whether they’ll be able to take their small pot lump sum from the receiving scheme after they transfer.

You can also speak to a Financial Conduct Authority-regulated adviser to get advice based on your personal circumstances. If you don’t already have an adviser, you can find one on the Unbiased website. Please note an adviser may charge for their advice.  You can also speak to MoneyHelper,  who provide free and impartial guidance.

If you’d like to find out more about this and other information about small pot claims, please visit HM Revenue & Customs dedicated lump sums and small pensions payments manual.

If anyone other than you want to access information about your pot then we require a Letter of Authority. This could be a letter, email or fax and must mention People’s Partnership or one of our products.

A Letter of Authority will be noted on our system and will remain in place for 10 years.

The third party will need to pass the normal Data Protection checks.

• Inflation – this is the rate at which prices for goods and services will increase over a period of time. Our projections assume a rate of 2.5% each year until your selected retirement date. We illustrate how inflation will reduce the buying power of your pension pot over time and so your projected value at retirement is in ‘real terms’ ie today’s prices (see below for more details).
• Future contributions received through your employer will increase each year by inflation (2.5%). However, any payments you send to us by personal Direct Debit will remain unchanged.
• Projected growth rates of the funds you’re invested in.
• The effect of the annual charge and the management charge at 0.5% a year (and any future rebates on your management charge). To find out exactly how much you’re charged, please log into your account and go to ‘Manage my pension’, followed by ‘Charges’.

How inflation eats away at your retirement income

You may recall the year 2000 when the average price of a loaf of bread was 51p*. That same loaf now (May 2023) would cost you £1.37* – that’s inflation at work. Rises in everyday costs due to inflation over the long term could mean your pension savings will be worth less in today’s prices, in other words in real terms, when you come to access them. However, this reduction in value will be lessened if investment growth beats inflation.

Many people underestimate the dramatic impact this could have on their retirement plans. Imagine you left £100,000 under your bed and inflation was 2.5% every year. In 5 years’ time, that money would only be worth – in today’s prices – £88,110, in 10 years’ time it would be worth £77,630 and in 20 years’ time it would be worth just £60,270.

Our pension projections consider the effect of inflation and show what your pension could buy in real terms ie today’s prices. Using the example above, if you’re retiring in 20 years’ time, a projected pension pot of £100,000 may be shown as £60,270.

Let’s look at some examples of how you could be affected

Let’s say you’re planning to retire in 10 years’ time, inflation is 2.5% per year during this time, and you have a pension pot that’s currently worth £50,000. To simplify these calculations, we don’t include future contributions in these examples.

• If the value of your pension pot increased by 2.5% per year

Your pot at retirement would be worth £64,000, but you’d be no better off in real terms because the price of all goods and services would have increased by 2.5%. Your £64,000 would buy the same as your £50,000 could buy today. So, the value of your pension pot, in real terms, will remain static.

• If the value of your pension pot increased by 4% per year

Your pot at retirement will have grown in real terms by 1.5% and would be worth £74,000. This amount would buy more than your £50,000 could have bought today.

• If your pension pot grew less than 2.5% per year­

You’d be worse-off at retirement, in real terms, because your fund wouldn’t have kept up with the rate of inflation and inflation would have outstripped the growth of your pot.

So, you may be wondering what’s the point of paying into your pension if inflation is going to eat away at it?

Pensions are a great way to beat the inflation trap – here’s why:

• The 2.5% assumed inflation rate, which is reflected in your projected pot at retirement, is an industry-wide rate that’s set by the Financial Conduct Authority. However, it’s impossible to predict what the actual rate of inflation will be in the future.
• The projections are estimates based on the information that we know at the time of the illustration. The actual returns on your pension may well be higher or lower than these estimates.
• You’ll normally earn ‘gains on previous gains’ – this is known as compounding. When you invest money into a pension, you normally make a return on it. In the following year, you’ll make a return on both your original sum, along with your first-year return. This compounding continues until you reach your retirement age, so the earlier you start investing in a pension, the more you’ll benefit.
• Don’t forget that salaries and therefore any salary-based pension contributions tend to rise in line with inflation. Also, continuing to contribute to your pension means that you’ll be able to take advantage of the tax relief available.
• If you stop your contributions, your employer may stop paying in too. So, don’t lose out.

Don’t forget, it may be a struggle getting by on just the State Pension (which is currently £230.25** a week). Many people who haven’t saved into a private or workplace pension, may be alarmed when they discover it’s much less than they need to enjoy their retirement.

Your projected pension pot at retirement is just an estimate of what might happen

It’s important to be aware that:

• It’s not a promise or guarantee that your projected pension pot at retirement will be paid at the value shown – the value may be very different.
• Any projection given is for guidance and is not guaranteed.

If you’d like a more detailed projection, which provides full details of the assumptions used, or a projection on a monetary basis as opposed to a real basis, please contact us.

_{* Source: RPI: Ave price – Bread: white loaf, sliced, 800g – Office for National Statistics (ons.gov.uk)
** based on someone reaching State Pension age on or after 6 April 2016 with 35 qualifying years on their National Insurance record.}