Pension value confusion

[rjj2015]

Apologies as this is not strictly a tax related question, but you lot are certainly smart enough to answer my question I hope !
I have been paying into a new pension scheme for just over a year now (final salary closed last year) and have received my annual statement.
It tells me that my estimated pension at 65 (I'm 45 now) will be £4000.

My confusion lies in the fact that the payments into this scheme are just under £6000 a year (company matches my payment) so why are we paying £6000 a year for a £4000 annual return.

I know life expectancy is taken into account, but over 20 years this still seems to be a waste of money

Am I missing something here...

[LozaACCS]

It does not seem right

Your defined benefits scheme has been replaced by a money purchase scheme.
It may either be a separate scheme or the values in the old scheme may be transferred to the new scheme.

Assuming the new scheme is a stand alone scheme then you will be investing 6K per year for 20 years.
Ignoring the tax relief on your contributions and assuming a modest growth of 2.5% pa the capital value would be app 165K on retirement.
The yields on single life annuities are currently app 5.7%
So the annual income would be 9.5K (taxable) even on this glum prognosis.
I would ask a local financial adviser to have a look at it.

[King_Maker]

I agree with Loza - I would recommend asking your IFA to review the matter.

Although current annuity rates for a 65 year old are ~ 5.7% on a single life basis, a joint life(50%) with 3% escalation are nearer 3.6%.