Drawdown Backsolve Income How To

Simple Request

• Bob was born on 01/01/1965 and has £125,000 currently invested in a personal pension.
• He earns £50,000 a year, increasing in line with inflation.
• He contributes £500 per month to his pension.
• His fund is invested: £125,000 in Cash.
• Bob wants to retire on 01/01/2030, at age 65.
• Bob would like his money to last until 01/01/2051 with a 50% probability and would like to know what his target income should be after retirement (increasing in line with inflation)

{
  "user": {
    "dateOfBirth": "1965-01-01",
    "gender": "MALE",
    "salary": 50000,
    "salaryIncrease": {
      "basis": "RPI"
    }
  },
  "assets": [
    {
      "typeReference": "PCPension",
      "contributions": {
        "amount": 500,
        "frequency": "MONTHLY",
        "taxBasis": "GROSS",
        "percentage": false
      },
      "funds": [
        {
          "code": "Asset_Class_Cash",
          "balance": 125000,
          "contributionPercentage": 100
        }
      ]
    }
  ],
  "targetOptions": {
    "increase": {
      "basis": "RPI",
      "rate": 0
    },
    "taxBasis": "GROSS"
  },
  "forecastOptions": {
    "todaysPrices": true,
    "retirementDate": "2030-01-01",
    "taxOptions": {
      "region": "UK"
    }
  },
  "backsolveOptions": {
    "dateMoneyRunsOut": "2051-01-01",
    "probability": 50
  }
}

Simple Response is then:

• Bob’s optimised target income is £4,949.69

{
    "targetOptions": {
        "target": 4949.694835603316,
        "increase": {
            "basis": "RPI",
            "rate": 0
        },
        "taxBasis": "GROSS"
    }
}

Complex Request

• Bob was born on 01/01/1965 and has £125,000 currently invested in a personal pension.
• He earns £50,000 a year, increasing in line with inflation.
• He contributes £500 per month to his pension.
• He expects to increase his contributions each year, broadly in line with price inflation increases.
• The pension fund he holds has an annual charge of: 0.45% pa for balances up to £50k; and 0.25% for funds above that. There are no other charges on the product (apart from fund charges).
• His funds are invested: £100,000 in CF Woodford Equity Income A Acc GBP (Citicode KEBA), with a fund charge of 0.1%; £25,000 in BlackRock -Emerging Markets Equity Tracker D Acc (Citicode G6HZ), with a fund charge of 0.25%.
• Future contributions are split 80%/20% into the two funds specified.
• Bob wants to retire on 01/01/2030, at age 65, taking a 25% tax free lump sum and using the remaining fund to income drawdown.
• Bob has a Defined Benefit pension of £10,000 (in today's prices) which is payable from 01/01/2031 and increases in line with RPI.
• He has a spouse who was born on 01/01/1969, and they are both entitled to the full state pension due at state pension age.
• Bob would like his money to last until 01/01/2051 with a 50% probability and would like to know what his target income should be after retirement (increasing in line with inflation)

{
  "user": {
    "dateOfBirth": "1965-01-01",
    "gender": "MALE",
    "stateBenefit": {
      "include": true,
      "amount": 8325
    },
    "salary": 50000,
    "salaryIncrease": {
      "basis": "RPI",
      "rate": 0
    },
    "spouse": {
      "dateOfBirth": "1969-01-01",
      "gender": "FEMALE",
      "stateBenefit": {
        "include": true,
        "amount": 8325
      }
    }
  },
  "assets": [
    {
      "typeReference": "PCPension",
      "contributions": {
        "amount": 500,
        "frequency": "MONTHLY",
        "increase": {
          "basis": "RPI",
          "rate": 0
        },
        "taxBasis": "GROSS",
        "percentage": false,
        "stopDate": "2030-01-01",
        "employerAmount": 0
      },
      "initialCharges": {
        "percentage": 0,
        "amount": 0,
        "contributionPercentage": 0
      },
      "annualCharges": {
        "amount": 0,
        "tieredCharges": [
          {
            "percentage": 0.45,
            "upperLimit": 50000
          },
          {
            "percentage": 0.25
          }
        ]
      },
      "funds": [
        {
          "code": "KEBA",
          "balance": 100000,
          "contributionPercentage": 80,
          "adjustment": 0.1
        },
        {
          "code": "G6HZ",
          "balance": 25000,
          "contributionPercentage": 20,
          "adjustment": 0.25
        }
      ]
    }
  ],
  "definedBenefits": [
    {
      "income": 10000,
      "todaysPrices": true,
      "startDate": "2031-01-01",
      "incomeIncrease": {
        "basis": "RPI",
        "rate": 0
      }
    }
  ],
  "targetOptions": {
    "increase": {
      "basis": "RPI",
      "rate": 0
    },
    "taxBasis": "GROSS"
  },
  "forecastOptions": {
    "todaysPrices": true,
    "retirementDate": "2030-01-01",
    "lumpSumPercentage": 25,
    "taxOptions": {
      "region": "UK"
    }
  },
  "backsolveOptions": {
    "dateMoneyRunsOut": "2051-01-01",
    "probability": 50
  }
}

Complex Response is then:

• Bob’s optimised target income is £25,877.49

{
    "targetOptions": {
        "target": 25877.49262961765,
        "increase": {
            "basis": "RPI",
            "rate": 0
        },
        "taxBasis": "GROSS"
    }
}