There are many unknowns involved in making projections of future pension entitlements, for instance:

• a client’s personal circumstances may change leading to a greater (or lesser) need for income and/or capital in retirement;
• it is likely that tax rates and legislation will change;
• investment returns will vary;
• changes may occur to the social security system
• the rate of inflation in the future is unknown and difficult to predict.

In pension terms, the key relationship is between the rate of inflation and the rate of return on investments and it is therefore important to compare in terms of today’s prices:

• the amount of income and capital clients will need in retirement; with
• the value of their existing pension and non-pension assets.