Understanding Your Workplace Pension Statement

Your annual pension statement can look like a wall of numbers and jargon. But understanding it is essential for knowing whether you are on track for the retirement you want. This guide breaks down each section so you know exactly what to look for.

Your Pension Pot Value

This is the total value of your pension at the statement date. It is the sum of all contributions (yours and your employer’s) plus any investment growth, minus charges.

Do not panic if the value has gone down since last year — pension investments fluctuate with markets, and what matters is the long-term trend, not short-term movements. If you are decades from retirement, temporary dips are normal.

Contributions

Your statement should show:

• Your contributions — the amount deducted from your pay
• Employer contributions — what your employer paid in
• Tax relief — the government top-up (20% basic rate relief is usually added automatically)

Check that the percentages match what you agreed with your employer. Under auto-enrolment, the minimum is 5% from you and 3% from your employer (8% total of qualifying earnings), but many employers offer more generous matching if you increase your own contributions.

Projected Retirement Income

Most statements include a projection of what your pension might provide at retirement. These projections use standardised growth rates set by the FCA:

• Typically showing a low, medium, and high growth scenario
• They assume you continue contributing at the current rate until retirement
• They are adjusted for inflation, so the figures are shown in “today’s money”

These projections are estimates, not guarantees. Actual outcomes depend on investment performance, charges, and any changes to your contributions.

Charges and Fees

Your statement should disclose the charges applied to your pension. Common charges include:

• Annual management charge (AMC) — typically 0.3% to 0.75% per year for workplace default funds. This is deducted from your pot value.
• Transaction costs — costs of buying and selling investments within the fund
• Platform fees — some providers charge a separate administration fee

Even small differences in charges compound significantly over decades. A 0.5% annual charge difference on a £100,000 pot over 25 years could cost over £25,000 in reduced returns.

Your Investment Funds

Your statement shows which fund or funds your pension is invested in. Most workplace pensions default to a lifestyle or target-date fund that automatically adjusts risk as you approach retirement — typically moving from equities towards bonds and cash.

If you are many years from retirement and your fund is very conservative (high allocations to bonds or cash), it may be worth reviewing whether a higher-growth option would be more appropriate for your time horizon. Equally, if you are within 10 years of retirement, check that your fund is gradually reducing risk.

What to Do With Your Statement

When you receive your statement:

1. Check the contributions — are they correct and is your employer paying their share?
2. Review the projection — does the projected income look reasonable for your needs?
3. Check the charges — are they competitive? If they seem high, you may be able to switch funds.
4. Consider increasing contributions — especially if your employer offers matching above the minimum
5. Add the pot value to your Wealth365 Fact Find — to see how it fits into your overall financial plan