This FRS Pension Calculator is designed to provide an estimated future value of your pension pot, taking into account your current savings, ongoing contributions, and expected investment growth, while also considering the impact of inflation.
How It Works:
The calculator projects the growth of your pension pot over time using a compound interest formula, adjusted for annual contributions and inflation. Here's a breakdown of the key components:
1. Compound Growth Calculation:
For each year until your desired retirement age, your pension pot grows based on the expected annual growth rate. The formula for compound interest is:
Future Value = Present Value * (1 + Growth Rate)^Number of Years
In this calculator, we apply this iteratively each year, adding your annual contributions before calculating the next year's growth.
2. Impact of Contributions:
Your regular annual contributions are added to the pension pot at the beginning of each year (for simplicity in this projection), and then this increased amount compounds over the remaining years.
3. Effect of Inflation:
Inflation erodes the purchasing power of money over time. The calculator factors in an expected annual inflation rate to provide a projection of your pension's value in real terms (i.e., adjusted for inflation) at retirement. This gives you a more realistic idea of what your money might buy in the future.
The calculator uses this real growth rate to project the future value, effectively discounting the nominal growth by inflation each year.
4. Key Inputs Explained:
Current Age (Years): Your current age.
Desired Retirement Age (Years): The age at which you plan to retire.
Current Pension Pot Value: The total amount you currently have saved in your pension.
Annual Contributions: The total amount you expect to contribute to your pension each year.
Expected Annual Growth Rate (%): The average annual return you anticipate from your pension investments (before inflation). This is an estimate and actual returns can vary significantly.
Expected Annual Inflation Rate (%): The average annual rate at which prices are expected to rise.
5. Interpreting the Result:
The final figure represents the estimated value of your pension pot in today's money (inflation-adjusted) at your chosen retirement age. This projection is a valuable tool for financial planning, helping you understand if you are on track to meet your retirement goals.
Disclaimer:
This calculator provides an estimation for guidance purposes only. It does not constitute financial advice. Investment returns are not guaranteed, and the value of pensions can go down as well as up. It is recommended to consult with a qualified financial advisor for personalized advice regarding your retirement planning.
function calculatePension() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var retirementAge = parseFloat(document.getElementById("retirementAge").value);
var currentPensionPot = parseFloat(document.getElementById("currentPensionPot").value);
var annualContributions = parseFloat(document.getElementById("annualContributions").value);
var expectedAnnualGrowth = parseFloat(document.getElementById("expectedAnnualGrowth").value) / 100; // Convert to decimal
var expectedInflationRate = parseFloat(document.getElementById("expectedInflationRate").value) / 100; // Convert to decimal
var resultDiv = document.getElementById("result");
resultDiv.style.display = 'block';
resultDiv.innerHTML = "; // Clear previous results
// Input validation
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentPensionPot) || isNaN(annualContributions) || isNaN(expectedAnnualGrowth) || isNaN(expectedInflationRate)) {
resultDiv.innerHTML = 'Please enter valid numbers for all fields.';
return;
}
if (currentAge < 0 || retirementAge < 0 || currentPensionPot < 0 || annualContributions < 0 || expectedAnnualGrowth < -1 || expectedInflationRate < -1) {
resultDiv.innerHTML = 'Please enter positive values for age, pot, and contributions. Growth/inflation rates must be realistic.';
return;
}
if (retirementAge <= currentAge) {
resultDiv.innerHTML = 'Retirement age must be greater than current age.';
return;
}
var yearsToRetirement = retirementAge – currentAge;
var projectedPension = currentPensionPot;
// Calculate real growth rate (approximated)
var realGrowthRate = ((1 + expectedAnnualGrowth) / (1 + expectedInflationRate)) – 1;
// Ensure real growth rate isn't excessively negative if inflation is very high
if (realGrowthRate < -1) {
realGrowthRate = -0.99; // Prevent nonsensical results
}
for (var i = 0; i < yearsToRetirement; i++) {
// Add contributions for the year
projectedPension += annualContributions;
// Apply real compound growth for the year
projectedPension *= (1 + realGrowthRate);
}
// Round to 2 decimal places for currency representation
projectedPension = Math.round(projectedPension * 100) / 100;
resultDiv.innerHTML = 'Estimated Pension Pot at Retirement (in today\'s value): £' + projectedPension.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + '';
}