I understand the difference between these schemes, and how they operate, but how do I do I work out the difference in pension produced by the same total contribution levels in each scheme?
Is there a calculator on the web somewhere to do Defined Contribution calculations given certain assumptions?
Thanks,
John
Defined contribution calculators make assumptions about the performance of your investment and the annuity rate you get when you retire. Both of these make a very big difference to what you get at the end of the day, and it is something you can't know in advance.
If you put your money in a long dated gilt fund, then you can make a pretty reasonable guess as to what you will get when you retire, but that won't give you the best investment performance.
Oh yes it will!
For some value of "best", at least. There's the bird in the hand principle, for instance, according to which any "better" performance carries with it a risk that it might perform worse, and with gilts this risk is minimal, or so the government "promise" us.
Thanks - but where are these calculators?
John
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