If prospects for pensions are grim for companies and workers alike, do we really need grisly details of our own pension plan? Or is it better to remain in ignorance and hope?

That question should be answered by the service available from April 6 when anybody holding a money purchase pension (personal, stakeholder or occupational) can have a Statutory Money Purchase Illustration (SMPI) on demand.

The illustration will be provided with the plan's annual statement and will give consumers for the first time:

A summary of the plan's current value.

An indication of the fund's projected total on retirement.

An illustration of projected retirement income the fund is likely to provide.

For workers keen to escape the daily grind, the report may not make pleasant reading.

Many holders of stakeholder and other pensions have seen their savings fall in value in the past two or three years.

Workers in company pension schemes have their own worries.

Employers are switching from defined benefits schemes, linked to final salary, to inferior defined contribution schemes that leave savers at the mercy of stock markets and cost employers far less.

There is pain at the personal level too. The Prudential says a 65-year-old man who paid £200 a month into his fund would have started retirement a year ago with a handsome pension pot of £175,000.

Today, the same maturing policy would provide £140,000, a 20 per cent fall.

Falling annuity rates are eroding actual retirement income even further.

Workers can already use a BR19 form, produced by the Department for Work and Pensions (DWP), to find the likely level of State pension they can expect at retirement age.

Now, private pension providers will offer something similar, using computer software devised by Birmingham-based Aqera iPensions.

Spokesman Ed Holt said: "People in final salary pensions do not need this service because they roughly calculate likely entitlement as a percentage of final salary.

"Working out the eventual value of defined contribution pension schemes is more complicated because of the structure of the plan, the charging system, the product type and level of contributions both past and future.

"It is also vital to calculate the likely impact of inflation before the pension is drawn."

Although the projections assume employees work at a similar or improved earnings level until retirement, Aqera's systems also assess the likely impact of early retirement, extra contributions and pension holidays - by either employees or employers.

Anything to provide a better snapshot of our personal financial may encourage younger workers to boost saving levels long before retirement.

Martin Smith, chief executive at Close Wealth Management, said: "There is huge ignorance about pensions so the more information which individuals have at an early age the better. People find too late they have saved far too little."

But regular pension fund statements might also reveal the value of private pensions based on defined contributions going backwards.

According to the WM consultancy, pension funds lost £100 billion last year in the rout of shares.

In the current economic conditions, we are simply not putting enough money in.

Staff at Sainsbury's, the supermarket chain, are paying seven per cent of income to keep their final salary pensions but 10 to 15 per cent of many people's income might be needed to guarantee a decent pension.

With returns so poor, why save for pensions anyway?

The key advantages are the tax break allowed on pension savings, the discipline of regular saving and the regular contributions which better employers put in personal pension pots.

But unless you can amass a sizeable sum, it might be hardly worth the bother.

It has been calculated that, from October 2003, men will need £75,000 in their pension pot to exceed the minimum income guaranteed in state benefits to those who save nothing at all.

At current annuity rates, married couples needs a pension fund of £130,000 to top the income which the state provides for nothing.

Arguments for alternative investments during your working life - tax-free ISAs, properties to earn rental income, maybe even traded endowment policies - become stronger while pension returns remain low.

Pensions, by themselves, find it increasingly hard to deliver a golden retirement.

The Department of Work and Pensions is committed to Combined Pension Forecasts, which collate information from private and State schemes in one place.

Full details on: www.thepensionservice.gov.uk/pensionforecast
Friday March 28 2003