E.R.I.C. Ask E.R.I.C.

Inputs

50
50
£
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67
65

The calculator assumes that you and your partner retire at the same time.

Premium options:

Select a standard of living based on the widely recognised Retirement Living Standards:

Or set your own target income below:

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0

Use the budget calculator to set amounts for individual categories of spending:

Budget Calculator

0

0

If you have a final salary or career average pension, enter the annual pension you are entitled to start receiving at your scheme's Normal Pension Age. If you are an active member still accruing benefits, provide the projected benefits figure here that assumes you remain employed and your salary keeps increasing.

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£

If your scheme provides a DB lump sum, enter the gross amount below. CMP will apply your remaining Lump Sum Allowance, drip-feed any tax-free part into your ISA, and treat any excess as taxable DB pension income in the year it is paid.

£

Use this section to add any part time employment or self-employed earnings you expect to continue receiving into retirement.

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75

Enter monthly rental income after allowable expenses have been deducted.

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£
£
3%
75

Enter investments currently held outside pensions and ISAs in a General Investment Account. If drip-feed is selected, the balance is moved into the ISA over time using available ISA allowance.

£
20%

The amount of your State Pension below assumes you will be entitled to the full amount. If this might not be the case due to gaps in your national insurance record, find out what your actual entitlement is at www.gov.uk and then update the value below.

If you are already retired, below State Pension age, and do not expect a full State Pension, consider whether purchasing missing National Insurance years could improve your entitlement using the NI Top-Up Contribution Calculator.

£

Defined Benefit Pension

Assumptions

Select an FCA Growth Scenario - These three scenarios are those specified by the Financial Conduct Authority for use in pension illustrations.

i
7%
7%
2.5%

See the effect on your retirement age from fund charges at three different levels, or use the sliders to set specific values. If you are planning to consolidate your pension funds in one place, use the level of charges expected for the destination provider.

1%
1%

Choose the end age of your retirement projection. You can view the average life expectancy for someone of your age using this calculator.

99

Withdrawal Strategy

Select the age at which to start receiving your annual pension and to receive any tax free lump sum.

Provide the benefits you have already accrued, valued at your scheme's normal pension age (NPA), assuming you left service immediately.

£
£

Please also provide the number of years of service you have already accrued. This is required for the active-member approximation.

0
65
Defined Benefit Pension Amount
Reduced Tax Free Lump Sum

Temporarily increase your target income for a fixed period in retirement.

70
0%
0

You can afford more income early in retirement if you specify a reduction in income later in retirement. Indicate the age at which you want a reduction below, along with the percentage reduction. You can specify a second reduction at a later age.

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0%
65
0%

You can model the impact of deferring your State Pension. If your selected retirement age is after your State Pension age, deferral to retirement is applied automatically. Each deferred year increases annual State Pension payments by 5.8%, on top of the normal yearly increase (inflation or 2.5%, whichever is higher).

0

Enter a minimum balance cushion for your ISA throughout your retirement.

£

Risk Management

Stress-test your retirement income by simulating a market crash. Define your scenario below, then tick the box to apply the scenario.

Your affordable income will be lower after the crash. Set your maximum tolerable income reduction to compare with the reduced affordable income to determine whether the stress test has passed or failed.

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0%
2
0%

Set parameters for a cash buffer below. Use these with the market crash modelling to determine an appropriate level for your appetite for risk.

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0%
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0%
3.5%

The weighted average growth rate for this asset mix is 0.0%. The asset mix in your funds is rebalanced each year to maintain these buffers and percentages for the whole projection.

In purchasing an annuity you exchange some or all of your pension fund for a guaranteed income for life. This removes the risk associated with a market crash and the risk that you run out of funds in later life. But in exchange for the certainty, your affordable income may be lower.

To calibrate the annuity rate calculator to rates currently available in the market and to your specific circumstances, use the Annuity Rate Calibration Tool.

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0%

Select the level of increases:

Tax Optimisation

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£0

This involves extracting up to the £20,000 ISA annual allowance of tax-free cash each year from your pension and adding it to your ISA, until the available tax-free cash is used up. Use the age below to choose when the drip feed starts.

Choose to divert your existing pension contributions to your ISA for additional flexibility or divert your ISA contributions to your pension for additional tax relief.

Select the percentage of salary to switch from pension contributions to take-home pay and add to your ISA.

0%

Divert your ISA contributions into your pension to boost tax relief.

0%

0

To observe how different strategies impact your Total Retirement Tax Rate, select a tax chart and watch the Key Figures change as you adjust the slider.

Note that the optimum income mix depends on the assumptions made about future investment returns and inflation.

Use this section to estimate how inheritance tax could affect your estate over time. Select the Fund Values Chart to view the results. Inheritance Tax is charged at 40% on the value of your estate above £325,000, with an additional £175,000 allowance if you pass your home to direct descendants (subject to tapering for estates over £2 million). It is assumed these allowances are fixed until at least 2030.

The red area on the chart shows where inheritance tax liability exceeds liquid assets that can be used to pay the inheritance tax bill, indicating that the family home will have to be sold to pay the bill. Use the Minimum ISA Balance feature above to fund your inheritance tax liability and see the lower income you can afford if you want to avoid the sale of the home.

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£
3%
0

Other Income & Balances

Regulatory Change Scenarios

See the effect on your affordable retirement age if the state pension age increases. Select a new state pension age then tick the box to update the results.

67

Tax bands are currently frozen until 2031, dragging more people into higher rate bands as earnings rise. Investigate the effect on your retirement income if the freeze is extended beyond this point. Enter the number of additional years to freeze the tax bands.

0

Explore the potential impact of a future reduction in the 25% tax-free lump sum entitlement. Use the slider to adjust the maximum tax-free percentage available on retirement.

25%

Explore the effect of a reduction in the current £268,275 tax-free lump sum lifetime limit. Use the box below to enter the limit.

£

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Your Affordable Retirment Age:

years months
Age Gross State Pension

i 		Gross Defined Benefit Pension

i 		Gross Annuity Payments

i 		Gross Pension Fund Income

i 		Gross Part Time Earnings

i 		Gross Rental Income

i 		Net State Pension

i 		Net Defined Benefit Pension

i 		Net Annuity Payments

i 		Net Pension Fund Income

i 		Total Tax Paid

i 		Net Part Time Earnings

i 		Net Rental Income

i 		ISA Withdrawals

i 		GIA Withdrawals

i 		Total Net Income

i

£
£
£

0

If your partner has a final salary or career average pension, enter the annual pension they are entitled to start receiving at their scheme's Normal Pension Age. If they are an active member still accruing benefits, provide the projected benefits figure here.

65
£

If your partner will receive a DB lump sum, enter the gross amount below. CMP will apply their remaining Lump Sum Allowance, drip-feed any tax-free part into their ISA, and treat any excess as taxable DB pension income in the year it is paid.

£

0

0
75

Enter your partner's monthly rental income after allowable expenses have been deducted.

0
£
£
3%
75

Enter investments your partner currently holds outside pensions and ISAs in a General Investment Account. If drip-feed is selected, the balance is moved into their ISA over time using available ISA allowance.

£
20%

The amount of your partner's State Pension below assumes they will be entitled to the full amount. If this might not be the case due to gaps in their national insurance record, find out what their actual entitlement is at www.gov.uk and then update the value below.

£

Defined Benefit Pension

Withdrawal Strategy

Select the age at which your partner should start receiving their annual pension and to receive any tax free lump sum.

Provide the benefits your partner has already accrued, valued at their scheme's normal pension age (NPA), assuming they left service immediately.

£
£

Please also provide the number of years of service your partner has already accrued. This is required for the active-member approximation.

0
65
Defined Benefit Pension Amount
Reduced Tax Free Lump Sum

Temporarily increase your partner's target income for a fixed period in retirement.

70
0%
0

You can model the impact of deferring your partner's State Pension. If your partner's selected retirement age is after their State Pension age, deferral to retirement is applied automatically. Each deferred year increases annual State Pension payments by 5.8%, on top of the normal yearly increase (inflation or 2.5%, whichever is higher).

0

Your partner may wish to maintain a minimum balance cushion in their ISA throughout retirement.

£

Risk Management

Lock in guaranteed income for your partner by converting some (or all) of their pension fund into an annuity.

To calibrate the annuity rate calculator to rates currently available in the market and to your specific circumstances, use the Annuity Rate Calibration Tool.

65
0%

Select the level of increases:

Tax Optimisation

57

£0

This involves extracting up to the £20,000 ISA annual allowance of tax-free cash each year from your partner's pension and adding it to their ISA, until the available tax-free cash is used up. Use the age below to choose when the drip feed starts.

Choose to divert your partner's existing pension contributions to their ISA for additional flexibility or divert their ISA contributions to their pension for additional tax relief.

Select the percentage of salary to switch from pension contributions to take-home pay and add to your partner's ISA.

0%

Divert your partner's ISA contributions into their pension to boost tax relief.

0%

0

To observe how different strategies impact your partner's Total Retirement Tax Rate, select a tax chart and watch the Key Figures change as you adjust the slider.

Note that the optimum income mix depends on the assumptions made about future investment returns and inflation.

Other Income & Balances