An online pension calculator has been launched by the Association of British Insurers and the Financial Services Authority.

By entering key factors such as the age you begin saving and the age you want to retire the calculator shows what your retirement income may be in today's money.

Although the service does give some figures for the state retirement pension, tests conducted by the BBC's Money Box programme found it omitted a number of important things.

Omissions

No information is given about means-tested benefits such as the minimum income guarantee. Mig can top up the basic state pension by more than �20 a week. So there is little point in saving up for a personal pension that pays you less than that.

The calculator also fails to mention the new Pension Credit which starts in October 2003 and will affect the value of saving up for your own pension.

And Money Box found that the figures given for the state pension may be inaccurate for the person using the calculator.

And there is no warning about the fact that people paying into a company pension scheme may not be able to save up in a stakeholder plan as well.

Predictions

The final value of the pension depends on predictions about inflation, how much pension your savings will buy, and how long you will live.

It also depends on how much the money you save will grow each year.

Work and Pensions Secretary Andrew Smith welcomed the move

The ABI assumes that will be 7% each year until you retire. No-one knows if that will happen or not.

So the figure worked out by the calculator is only a guide and will almost certainly not be accurate.

Secretary of State for Work and Pensions Andrew Smith MP said of the new service:

"I welcome the introduction of the calculator and recognise the need for the shared commitment of ABI and FSA in better informing people about pensions."

Closing the gap

The initiative supports the ABI's Five point plan to close the UK's �27bn a year savings gap.

ABI Director General Mary Francis said "I believe it is very useful.

"The people that we talked to when we were developing it - ordinary people in discussion groups - all said that the kind of information they get about pensions they find quite alien, quite difficult to use and to understand.

"What this does is personalise it, it says to you how much do you want to save, what do you think you might want to get as an income in retirement.

"So you think about it in a very clear, personal way and all the experiments that we've done so far show that people are fascinated by it."

You can access the calculator by visiting the ABI website.