51茶馆

1. Introduction

Background

1.1 The Office for National Statistics (鈥極NS鈥�) produce and publish a biennial survey of the wealth and assets of households in Great Britain (the 鈥榃AS鈥�). We understand the WAS is used widely across government to inform policy making.

1.2 Pension wealth is captured alongside property, physical assets and net financial wealth (e.g. savings). Pension wealth is split across two categories: pensions that are defined contribution (鈥楧C鈥�) in nature, and pensions that are defined benefit (鈥楧B鈥�) in nature.

1.3 The ONS use a model (as set out in Appendix B) to estimate pension wealth based on answers to household survey questions. This model is subject to public scrutiny.

1.4 The ONS commissioned the Government Actuary鈥檚 Department (鈥楪AD鈥�) to provide annuity factors for use in the ONS鈥檚 pension wealth model for Round 8 of the wealth and assets survey (i.e. interviews conducted between April 2020 and March 2022).

1.5 The annuity factors GAD have calculated for Round 8 are published in the spreadsheet titled 鈥極NS-WAS Round 8 Annuities.ods鈥� on the 25 June 2025, which represent the 饾憥饾憛饾憱 (饾憽) variable in the ONS model (see Appendix B).

1.6 The assumptions used to calculate these annuities are set out in Appendix A. Please refer to GAD鈥檚 report on the discount rate methodology titled 鈥榲aluing defined benefit pension wealth鈥� dated 5 December 2024, which includes further detail on the financial assumptions.

Purpose and third-party reliance

1.7 This guidance note is addressed to the Wealth and Pensions Analysis team within the ONS. This note shows how the annuity factors GAD have calculated should be used in the ONS wealth model to place an approximate value on the wealth of pension benefits.

1.8 This guidance note has been prepared for the use of the ONS for the purposes of demonstrating the application of the annuity factors in Round 8 only. It includes examples of how these annuity factors should be applied in practice for different situations and types of member.

1.9 Other than the ONS, no person or third party is entitled to place any reliance on the contents of this guidance, except to any extent explicitly stated herein. GAD has no liability to any person or third party for any action taken or for any failure to act, either in whole or in part, on the basis of this guidance, whether or not GAD has agreed to the disclosure of its advice to the third party.

Limitations

1.10 This guidance should not be used for any purpose other than those set out in this guidance.

1.11 ONS should ensure they are content that the assumptions used to calculate the annuity factors are reasonable for their purposes. The ONS need to ensure that they are using the appropriate factors when performing calculations, and applying the factors as intended.

1.12 Advice provided by GAD must be taken in context and is intended to be considered in its entirety. Individual sections, if considered in isolation, may be misleading, and conclusions reached by a review of some sections on their own may be incorrect. GAD does not accept responsibility for advice that is altered or used selectively. Clarification should be sought if there is any doubt about the intention or scope of advice provided by GAD.

Compliance

1.13 Other aspects of ONS鈥檚 model review, including a review of the questionnaire used to collect data for the model, are outside the scope of this guidance note.

1.14 This guidance note and annuity factors, and the work undertaken to produce it, has been carried out in accordance with the applicable Technical Actuarial Standards: TAS 100 issued by the Financial Reporting Council (FRC). The FRC sets technical standards for actuarial work in the UK.

2. Pension wealth conversion annuity factors

2.1 The annuity factors set out in the spreadsheet titled 鈥極NS-WAS Round 8 Annuities.ods鈥� have been calculated using the assumptions as set out in Appendix A.

2.2 These annuity factors are intended to be used in the ONS鈥檚 current wealth model as set out in Appendix B to approximate the overall wealth of DB pensions (and DC pensions in payment)(Note 1) for Round 8 of the ONS鈥檚 Wealth and Assets Survey.

2.3 The user will need to select the relevant factor for each individual pension from the relevant table (1-4), using the following identifiers (as established in the ONS Round 8 survey responses): Age (last birthday) Sex (male/female) Pensioner status (current pensioner, active or deferred member) Term to assumed retirement age (complete years for active or deferred members from their last birthday) Member pension or survivor鈥檚 pension (only for pensions already in payment)

2.4 The relevant factor table (1-4) to refer to in the spreadsheet are:

Category	Males	Females
Current pensioner	Table 1, column B. 鈥淢ale pensioner鈥�	Table 2, column B. 鈥淔emale pensioner鈥�
Survivor pensioner (receiving a dependant pension)	Table 1, column C. 鈥淢ale survivor鈥�	Table 2, column C. 鈥淔emale survivor鈥�
Active or deferred/retained (i.e. pension not in payment yet)	Table 3 (column depends on term to retirement age)	Table 4 (column depends on term to retirement age)

2.5 For any non-pensioners who are over their retirement age, the user should refer to tables 3 or 4 (depending on male or female) and look up the relevant annuity factors assuming zero term to retirement at the member鈥檚 age at the interview date. See example 5 in section 3 below.

Note 1: As per GAD recommendation 7 in Discount Rate methodology report

3. Example calculations

This section provides examples of the calculations to estimate the pension wealth for individuals, by applying the relevant annuity factor, 饾憥饾憛饾憱 (饾憽), to the annual pension using the ONS鈥檚 model (as set out in appendix B).

For the non-pensioner examples, the calculations assume 饾憫 = 2.40%, in line with the recommendation in GAD鈥檚 advice 鈥榲aluing defined benefit pension wealth鈥� paper dated 5 December 2024.

Example 1: Current pensioner

Male age 70 years and 2 months at interview date

Annual pension in payment of 拢25,000 pa at interview date (饾憣饾憱 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Table 1: Male pensioner annuity factor for a 70 year old: 14.84 (饾憥饾憛饾憱 (饾憽) 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Current pensioner, so no discounting factor required or lump sum payment.

Estimated pension wealth at interview date: 拢25,000 x 14.84 = 拢371,000

Example 2: Partner/survivor

Female, age 85 years and 9 months at interview date

Partner鈥檚 annual pension in payment of 拢2,500 pa at interview date (饾憣饾憱 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Table 2: Female survivor annuity factor for an 85 year old: 6.27 (饾憥饾憛饾憱 (饾憽) 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Current pensioner, so no discounting factor required or lump sum payment.

Estimated pension wealth at interview date: 拢2,500 x 6.27 = 拢15,675

Example 3: Active member (DB pension)

Male, age 40 years and 7 months at interview date

Estimated accrued DB pension of 拢15,000 pa at interview date (饾憣饾憱 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Assumed retirement age in ONS model: 62

Years to assumed retirement age: 62 鈥� 40.58 = 21.42 years

For term to retirement in the factor table, use rounded age at last birthday: 62 鈥� 40 = 22

Table 3: Male annuity factor for a 40 year old with 22 years to retirement: 20.46 (饾憥饾憛饾憱 (饾憽) 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Estimated DB pension wealth at interview date: 拢15,000 x 20.46 / (1+2.40%) 22 = 拢182,137

Example 4: Deferred/retained member (DB pension)

Female, age 55 years and 6 months at interview date

Estimated accrued DB pension of 拢30,000 pa at interview date (饾憣饾憱 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Assumed retirement age in ONS model: 65

Years to assumed retirement age: 65 鈥� 55.5 = 9.5 years

For term to retirement in the factor table, use rounded age at last birthday: 65 鈥� 55 = 10

Table 4: Female annuity factor for a 55 year old with 10 years to retirement: 18.56 (饾憥饾憛饾憱 (饾憽) 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Estimated DB pension wealth at interview date: 拢30,000 x 18.56 / (1+2.40%) 10 = 拢439,238

Example 5: Deferred member over normal retirement age (DB pension)

Male, age 72 years and 6 months at interview date

Estimated accrued DB pension of 拢35,000 pa at interview date (饾憣饾憱 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Assumed retirement age in ONS model: 72.5

Years to assumed retirement age: 0 years (assume retires immediately)

Table 3: Male annuity factor for a 72 year old with 0 years to retirement: 13.91 (饾憥饾憛饾憱 (饾憽) 饾憱饾憶 饾憘饾憗饾憜 饾憵饾憸饾憫饾憭饾憴)

Estimated DB pension wealth at interview date: 拢35,000 x 13.91 / (1+2.40%) 0 = 拢486,850

Appendix A: assumptions underlying the Round 8 annuity factors

A summary of the assumptions used to calculate the annuity factors is shown below:

Assumptions	Round 8
Net discount rate	2.40%
Post-retirement mortality base tables (Note 1):	听
Male pensioner	101% of S3PMA
Female pensioner	104% of S3PFA
Male partner	102% of S3DMA
Female partner	101% of S3DFA
Future mortality improvements	ONS 2020 population projections
Commutation of pension at retirement	Nil
Marital assumptions:	听
Proportion married	ONS 2022 population estimates by marital status and living arrangements
Age difference	Males 2 years older than eligible partner (and vice versa)
Assumed partner pension proportion	50% of original member鈥檚 pension
Gender of partner	Partners are assumed to be the opposite gender to the member
Guarantee period for lump payment on death of member	Current pensioners: 0 years
听	Non-pensioners: 5 years

The annuity factors assume no mortality before retirement age.

The factors do not include revaluation rates or assumed salary increases before retirement, as this is allowed for separately in the ONS鈥檚 model shown in Appendix B.

Note 1:

Appendix B: ONS model breakdown

The ONS have outlined the structure of their intended approach to modelling DB pension wealth in Round 8 in line with GAD鈥檚 advice 鈥榲aluing defined benefit pension wealth鈥� paper dated 5 December 2024, summarised below:

ONS apply the above model to interviews with households in their sample in each wave/round.

The above formulation of the model covers the approach taken for deferred DB pension entitlements, where the 饾憣饾憱 pension payable may be known. Where interviewees remain active participants in their DB pension scheme, we understand this accrued value is calculated as:

饾憥饾憪饾憪饾憻饾憿饾憥饾憴 饾憻饾憥饾憽饾憭 脳 饾憼饾憭饾憻饾懀饾憱饾憪饾憭 脳 饾憹饾憭饾憶饾憼饾憱饾憸饾憶饾憥饾憦饾憴饾憭 饾憼饾憥饾憴饾憥饾憻饾懄;

There may be some scheme specific constraints that limit the pensionable salary definition or the maximum eligible service that are ignored. For interviewees currently in receipt of their pension, the period of discounting applied on the bottom of the equation is nil. Therefore, the wealth is derived solely from the in-payment pension 饾憣饾憱 and the relevant annuity factor.