How to Read Your Pension Annual Statement
Your pension provider is required to send you an annual statement at least once a year. Most people file it without reading it carefully. For UK expats and high-net-worth individuals, that is a costly habit. The statement contains information that affects your tax position, your retirement planning, and — if you are overseas — your decision about whether to keep the pension in its current wrapper.
This guide walks through every section of a typical pension annual statement and explains what each figure means, what it does not tell you, and what action to take.
What Your Statement Must Include
Under Financial Conduct Authority (FCA) rules, a pension annual statement for a defined contribution (DC) scheme must include:
- The current fund value (as at the statement date)
- The transfer value (often called the cash equivalent transfer value or CETV)
- A projected retirement income illustration
- The pension input amount for the current pension input period (relevant for Annual Allowance purposes)
- A breakdown of the funds held and the number of units
- The charges applied during the year
- Any contributions made during the year (employer and employee)
For defined benefit (DB) schemes, the statement instead shows the accrued pension entitlement (the annual income you have earned to date) and the transfer value.
The Fund Value vs the Transfer Value
These two figures are often confused, and they are not always the same.
Fund value is the current market value of your invested pension pot — the sum of all units across all funds, valued at today's prices. If markets have risen since your last statement, it will be higher than last year.
Transfer value (CETV) is the amount the scheme would pay if you transferred your pension to another registered pension scheme or a QROPS. For most money purchase (DC) pensions, the transfer value is very close to the fund value (the difference being any exit charges or market value adjustments). For older with-profits pensions, a market value reduction (MVR) may mean the transfer value is lower than the fund value.
For defined benefit schemes, the transfer value is calculated by the scheme actuary and can bear little resemblance to the "pension promise" value — it reflects the cost of replicating the DB income in a DC environment and fluctuates significantly with interest rates.
Why this matters for expats: If you are considering a QROPS transfer, the transfer value — not the fund value — is what will actually move to the new scheme.
The Projected Retirement Income
Your statement must include an illustration of the income your pension might provide at retirement. Statutory Money Purchase Illustrations (SMPIs) are governed by FRC technical standards, and providers must set growth-rate assumptions appropriate to the underlying investments (subject to a regulatory cap). A typical illustration shows a central projection alongside lower and higher scenarios — for example:
- Lower growth: a more cautious assumption (often around 2% per annum)
- Central growth: a mid-range assumption (often around 5% per annum)
- Higher growth: a more optimistic assumption (often around 7-8% per annum)
The exact rates vary by provider and by the funds you hold. They are illustrative scenarios, not forecasts, and the projection is typically shown in real terms (adjusted for inflation).
The illustration also shows a "real terms" value — the projected income adjusted for inflation (typically assumed at 2.5%) and the scheme's annual management charge (AMC). This is arguably the most useful figure because it tells you approximately what your pension might be worth in today's money.
What the projection does not tell you
The standardised projection cannot tell you:
- Whether the funds you are invested in are appropriate for your risk profile and time horizon
- Whether the charges applied by your scheme are competitive (a 1% AMC versus 0.25% makes an enormous difference over 20 years)
- What the pension will actually provide in retirement — it is an estimate, not a guarantee
- Whether your retirement date assumption is realistic
Treat the projection as a rough benchmark, not a plan.
The Pension Input Amount — Your Annual Allowance Position
One of the most important figures on your statement, and one that is frequently overlooked, is the pension input amount (PIA).
The PIA is the total increase in the value of your pension savings during the pension input period (which aligns with the tax year: 6 April to 5 April). For DC pensions, the PIA is simply the total contributions made (employer + employee + any third-party contributions). For DB pensions, the calculation is more complex (it is the increase in the capital value of the accrued benefit, using a 16:1 conversion factor, minus inflation).
Why this matters: The PIA is what counts against your Annual Allowance (£60,000 in 2026/27 for most individuals, though tapered for high earners). If your combined PIAs across all pension schemes exceed your Annual Allowance, you face an Annual Allowance charge at your marginal income tax rate.
For high earners, the tapered Annual Allowance can reduce the allowance to as little as £10,000. The taper applies where threshold income exceeds £200,000 and adjusted income exceeds £260,000, reducing the allowance by £1 for every £2 of adjusted income above £260,000 — reaching the £10,000 minimum once adjusted income is £360,000 or more.
Action point: Add together the PIAs from all your pension statements. If the total approaches or exceeds your allowance, seek regulated advice before making further contributions.
The Fund Breakdown and Unit Count
The statement should show each fund held, the number of units, the unit price, and the total value in each fund. This section allows you to:
- Verify the fund values match what you expect
- Review whether the fund selection still reflects your investment strategy
- Check whether any automatic switches have occurred (common in lifestyling arrangements, where the pension gradually moves from equities to bonds as you approach retirement)
- Identify any funds that have been closed or merged since last year
For workplace pensions with a default "lifestyling" fund, review the current equity/bond split. If you are more than ten years from retirement, a heavy bond allocation is likely to reduce long-term returns without providing meaningful protection.
Charges Applied During the Year
Pension charges fall into several categories:
- Annual management charge (AMC): the ongoing cost of the fund(s), expressed as a percentage
- Platform or administration charge: a separate charge by the pension provider or platform
- Transaction charges: dealing costs when units are bought or sold within the fund
The statement should show the total charges deducted during the year in pounds as well as as a percentage of the fund. For most modern auto-enrolment pensions, the total charge should be below 0.75% (the charge cap for auto-enrolment default funds). For older workplace pensions or personal pensions set up before 2012, charges can be significantly higher.
A 1% annual charge versus 0.25% on a £300,000 pot over 20 years costs approximately £100,000 in foregone growth. If your annual statement shows charges above 0.75-1%, consolidation to a lower-cost SIPP is worth investigating.
The Expression of Wishes — Check It Every Year
Most pension annual statements include a reminder to review your expression of wishes (sometimes called a nomination form). This is the document that tells the pension trustee or provider who you would like to receive your pension fund on death.
Pension death benefits fall outside your estate for inheritance tax purposes (until April 2027) precisely because the trustees have discretion over who receives the fund. Your expression of wishes guides that discretion but does not bind the trustees. Keeping it current is essential.
Review the form if:
- You have married, divorced, or entered a civil partnership since the last review
- A beneficiary has died
- Your financial circumstances have changed significantly
- You have had children or grandchildren
- You have moved overseas and wish to nominate overseas-resident family members
Action Points After Receiving Your Statement
Work through the following checklist when your statement arrives:
- Check the fund value against your records. Does it match your expectations given market movements?
- Record the PIA and add it to a running total across all your pensions. Compare against your Annual Allowance.
- Review the projected retirement income. Is it on track for the retirement income you need?
- Check the charges. If total charges exceed 0.75-1%, consider whether consolidation would be beneficial.
- Review the fund selection. Is it still appropriate for your time horizon and risk tolerance?
- Update the expression of wishes if circumstances have changed.
- Verify the transfer value if you are considering a QROPS transfer or pension consolidation.
For Expats: Special Considerations
If you are receiving your pension annual statement while resident overseas, several additional points apply.
Electronic statements: Most major UK pension providers now offer digital statements via a secure online portal. This is convenient but requires that the provider has your current email address and that you have set up online access. Some older workplace pension schemes still post statements by default — ensure they have your overseas address.
Access restrictions: A small number of UK pension providers restrict online account access from overseas IP addresses for compliance or fraud-prevention reasons. If you cannot log in from your overseas location, contact the provider directly to request an exemption or arrange for statements to be sent by post.
The QROPS consideration: If you are permanently resident overseas and your pension annual statement shows a significant fund value, it is worth reviewing whether a Qualifying Recognised Overseas Pension Scheme (QROPS) transfer would be advantageous. Key factors include the Overseas Transfer Charge (25% unless specific conditions are met), the tax treatment of pension income in your country of residence, and the long-term retirement strategy.
NI record: Your pension statement relates only to private or occupational pensions. For your State Pension entitlement, check your National Insurance record separately at gov.uk (or request a State Pension forecast by post if access is blocked overseas).
FCA Compliance Caveat
The value of pension investments can fall as well as rise. The projections shown on pension annual statements are illustrative estimates based on standardised assumptions and are not guaranteed. Tax rules and pension legislation change; the information in this guide reflects the position as of 2026. Pension planning is complex, and the appropriate strategy depends on your individual circumstances, tax residency, domicile, and financial objectives. This guide is for general information only and does not constitute regulated financial advice. Seek advice from an FCA-regulated adviser before making pension decisions.
How Global Investments Can Help
Global Investments works with UK expats and internationally mobile high-net-worth individuals to review and optimise pension arrangements across multiple jurisdictions. Whether you are receiving your annual statement for the first time in years, considering consolidation, or evaluating a QROPS transfer from overseas, our team can provide the regulated advice and international expertise required to make informed decisions.
Contact us to arrange a pension review with a qualified adviser who understands both the UK regulatory framework and the specific tax and residency considerations of your country of residence.
This guide is for general information only and does not constitute financial, legal or tax advice. Pension rules, tax rates and programme details change; verify current requirements with a qualified and FCA-regulated pensions adviser before acting. Pension transfers involving defined benefits over £30,000 require regulated advice.