Pension "pot"?

[JoanThursday1972]

What does the "pot" consist of? Is this the lump sum plus the worth of monthly pension? If the latter, I don't understand it because it has to be a bottomless "pot" since nobody can predict when anyone will drop dead.

The pot is a thing if you have paid into a private pension or a workplace pension that is not ‘defined benefit’.

So for example, someone may pay into a private pension for 30 years, paying in £100 a month (plus they would get a contribution from the government) and they would literally have a ‘pot’ of money at retirement age.

The pot of money could either be taken out as a lump sum/ essentially swapped to get an annuity which would give them a pre agreed income/ they could leave the money invested in whatever funds or shares it was invested in over the time their built up the pension savings and take an income from these (dividend payments).

The size of the income would depend on the pot. It’s generally between 3 & 4% of the value of the whole thing (the whole pot, aka all the savings inside your pension wrapper).

A private pension is actually just a savings account through which money is invested into the stock market. It’s yours, and how much you have in it is entirely dependent on what you contributed. So you can build up a pot of savings/investments.