Question :

Janet has been in a defined-contribution pension scheme since she was 40 and will retire in one years time at age 66. Her salary is currently 62,000. Throughout her enrolment in the scheme, she has paid in 4% of salary, and this has been topped up by employer contributions and tax relief worth 4% of salary. She will also qualify for a state pension of 9000 per year.

Requirement:

If, instead, Janet retires by opting to use her whole pension fund to buy an annuity, how much income would she have available to spend in her first year of retirement? (3 marks)

Note:

The required rate of return is not mention in the question. This is the first requirement of the question but it is already solved and maybe help you to solve above requirement.

1.1 If Janet puts her whole pension fund into a drawdown scheme (with annual income at 33% of her pre-retirement gross income), how much income will she receive in her first year? (3 marks).