We’ve put together a list of commonly asked questions about growth rates. If there’s anything else you need, you can use our contact form, to get in touch.

Where we refer to an inflation rate in the information shown below, the inflation rate assumption used in projections for illustrations which are governed by Financial Conduct Authority (FCA) regulations will remain  at 2.00%. 

However, for statutory money purchase illustrations (SMPI) which are governed by Financial Reporting Council regulations, the inflation rate assumption used in projections will remain as 2.50%.

These are estimates we use in personal illustrations to show the potential returns for an investment in a pension fund. They’re based on the types of investments in a fund.

It's a regulatory requirement to show low, mid and high growth rates to give you an idea how much your savings could be worth when you take your benefits.

However, when you come to take your benefits, your pension income will depend on how your investments have grown, interest rates and charges.

Low and high rates are 3.00% below and 3.00% above the mid growth rate, respectively. It’s possible that the low rate could be a negative growth rate.  

However, if you're invested in a With-Profits fund that has guarantees, we take account of these guarantees before calculating the low, mid and high growth rates. So the 3.00% difference below and above the mid growth rate may not apply to you and this is shown on your statement.

It means that the estimated growth rate is lower than the rate of inflation that we use for projecting your future benefits. To keep your fund's current value you need growth rates that match the rate of inflation. For your fund to grow in value, you need growth rates that are higher than the rate of inflation. There is 3.00% difference between the low, high and mid growth rate so, for example where the mid growth rate is 5.00%, after discounting for inflation it will be 2.94%* and the low growth rate will therefore be a negative figure.

Growth rates are simply estimates - when you come to take your benefits, your pension income will depend on how your investments grow, interest rates, charges and the volatility of the fund (this is how much your fund goes up and down).

*Source: Aegon UK

The low and high rates are worked out from the mid growth rate before it is adjusted for inflation.

If you're invested in a With-Profits fund that has guarantees, we take account of these guarantees before calculating the low, mid and high growth rates.

Each provider decides the rates of return they believe are suitable for different types of investments. Some may be more or less optimistic. Different providers might use different rounding conventions to arrive at the mid rate. Charges, deductions and any investment guarantees will also vary.

Estimated fund values in illustrations are shown after all charges have been deducted.

Find out how we calculate growth rates, also known as projection rates.

Most With-profits investments offer a minimum guaranteed return, as long as you keep your plan for a specified length of time. If you switch or transfer out of With-profits funds or cash in your investment before that time, you'll lose this guarantee. The amount of guarantee will depend on the type of With-profits fund you invest in, the type of plan, and when you invested in it.

You can find more information on each fund guarantee on our With-Profits - useful information page under the heading ‘Where can I find information about any guarantees I may have?’

Standard growth rate calculation basis

All firms are required to carry out projections using growth rates that they consider appropriate for each asset class. As firms may have differing views, this means firms might not use the same growth rate for projections. Their charges may also vary. We calculate the mid-growth rate by taking the growth rates for the assets in the fund(s) you've chosen, cap any at 5.00% (if over 5.00%) and weight them according to the proportion of each asset held (the 'weighted average'). The growth rate for each fund is based on our view of potential long-term returns of the main asset classes (equities, property, corporate bonds, government bonds and cash) and will vary depending on the fund(s). We call this this Economic Growth Rate. This rate is not guaranteed.

The impact of the With-profit investment guarantee

Some of these underlying investment guarantees can often provide a better rate of return than the Economic Growth Rate. We take these investment guarantees into account in the estimated fund values at your pension date, that we show in our illustrations.

How do we do this?

We compare the return on your With-profits investments by using the Economic Growth Rate, against the appropriate With-profits guarantee, and use whichever is higher.

Terminal bonus/market value reductions

We include any terminal bonus and/or market value reduction applicable at the calculation date in the fund value we use for projections. However, these don't form part of the investment guarantees so aren't included in the guaranteed growth assumptions.

Illustrations to an age before pension date

These guarantees are linked to your pension date so where we're projecting to a date before your pension date then they don't apply.

If you're investing in several funds (portfolio), we calculate the portfolio weighted rate for each fund by the proportion (%) it forms of the total portfolio. Once the portfolio weighted rates for all funds are calculated, we add them together to get the overall portfolio weighted rate. This is then adjusted for inflation.

Lifestyle funds are only available to pension investors. When investors are still some way off from retirement, they’re invested in a fund that aims to grow their investments. We've a number of different lifestyle funds, some investing entirely in equities, others investing in a mix of investments. Some years before retirement (usually six or seven depending on the fund), most lifestyle funds progressively move into investments better suited to helping protect annuity-buying power as retirement approaches, for example cash or bonds. These investments are generally regarded as having less growth (or loss) potential.

We take this change of investment strategy into account when calculating the projected maturity value for a lifestyle fund at retirement. Otherwise the projected maturity values would be unrealistically high because it would be based solely on the investments in the growth stage of the lifestyling process.

We’ve assumed that you’ll pay the same contributions (taking account of any increase in contribution that you've chosen) for the life of your plan. However, like your investments, these are affected by inflation, so we've shown these contributions on your illustration after an adjustment for inflation. This is a regulatory requirement for all pension providers.

We don’t show a projection for tax-free cash if your pension could be less than £120 a year.

From 1 October 2023, we made changes to the Statutory Money Purchase Illustration (SMPI). The  income value in the illustration assumes that no lump sum is chosen when you start taking benefits. At retirement you can typically take a lump sum of up to 25% of your fund value as a tax-free lump sum. You can find out more about the changes here.


The nominal rates (which aren't adjusted for inflation) which we use in illustrations are:

Low 1.50%
Mid 4.50%
High 7.50%

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