Growth rate updates to Aegon non-insured fund ranges

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For intermediaries

On the 30 April 2019, we updated growth rates for our non-insured funds available via Aegon Retirement Choices (ARC) and the Aegon Platform.

More about growth rates

Growth rates are estimates we use in personal illustrations to show what an investor could potentially get back from a fund. They’re based on assumptions we’ve made on the potential performance of each asset class (for example, equities, bonds, property, cash, etc.). You may sometimes see growth rates described as projection rates.

How we work out our growth rates for non-insured funds on our platform

We use Investment Association (IA) sectors to categorise the majority of our funds into broad groups. Each IA sector has a clearly defined set of rules setting out what types of investment can appear in each one. Most sectors are structured around the principal asset classes:

  • Equities
  • Government bonds
  • Corporate bonds
  • Property
  • Cash
  • Others

We calculate a growth rate for each IA sector using the average asset allocation per sector. We then apply that growth rate to each fund (available on our platforms) that appears in that sector.

The difference between low, mid and high rates

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

However, when they come to take their benefits, their pension income will depend on a number of factors including how much their investments have grown, interest rates and charges over the period.

Low and high rates shown are 3% below and 3% above the mid-growth rate, respectively. Depending on the asset class it’s possible that the low rate could be a negative growth rate.

The new rates

The new rates that will apply to all non-insured funds available via ARC and the Aegon Platform from 30 April 2019 are shown in the table below grouped by IA sector.

New rates table
  Gross-growth rates* Net-growth rates**
Investment Association (IA) sector High Mid Low High Med Low
IA UK Gilts 4.25 1.25 -1.75 4.00 1.00 -2.00
IA UK Index Linked Gilts 4.25 1.25 -1.75 4.00 1.00 -2.00
IA Sterling Corporate Bond 5.25 2.25 -0.75 4.75 1.75 -1.25
IA Sterling Strategic Bond 5.25 2.25 -0.75 4.75 1.75 -1.25
IA Sterling High Yield 5.25 2.25 -0.75 4.75 1.75 -1.25
IA Global Bonds 5.50 2.50 -0.50 5.00 2.00 -1.00
IA Global Emerging Markets Bond 5.50 2.50 -0.50 5.00 2.00 -1.00
IA UK Equity Income 8.00 5.00 2.00 7.00 4.00 1.00
IA Global Equity Income 8.00 5.00 2.00 7.25 4.25 1.25
IA UK All Companies 8.00 5.00 2.00 7.25 4.25 1.25
IA UK Smaller Companies 8.00 5.00 2.00 7.25 4.25 1.25
IA Japan 8.00 5.00 2.00 7.25 4.25 1.25
IA Japanese Smaller Companies 8.00 5.00 2.00 7.25 4.25 1.25
IA Asia Pacific Including Japan 8.00 5.00 2.00 7.25 4.25 1.25
IA Asia Pacific Excluding Japan 8.00 5.00 2.00 7.25 4.25 1.25
IA China/Greater China 8.00 5.00 2.00 7.25 4.25 1.25
IA North America 8.00 5.00 2.00 7.25 4.25 1.25
IA North American Smaller Companies 8.00 5.00 2.00 7.25 4.25 1.25
IA Europe Including UK 8.00 5.00 2.00 7.25 4.25 1.25
IA Europe Excluding UK 8.00 5.00 2.00 7.25 4.25 1.25
IA European Smaller Companies 8.00 5.00 2.00 7.25 4.25 1.25
IA Global 8.00 5.00 2.00 7.25 4.25 1.25
IA Global Emerging Markets 8.00 5.00 2.00 7.25 4.25 1.25
IA UK Equity & Bond Income 7.00 4.00 1.00 6.00 3.00 0.00
IA Mixed Investment 0-35% Shares 5.50 2.50 -0.50 5.00 2.00 -1.00
IA Mixed Investment 20-60% Shares 6.25 3.25 0.25 5.50 2.50 -0.50
IA Mixed Investment 40-85% Shares 7.00 4.00 1.00 6.00 3.00 0.00
IA Flexible Investment 6.50 3.50 0.50 5.75 2.75 -0.25
IA Money Market 4.00 1.00 -2.00 3.75 0.75 -2.25
IA Short Term Money Market 4.00 1.00 -2.00 3.75 0.75 -2.25
IA UK Direct Property 8.00 5.00 2.00 7.00 4.00 1.00
IA Property Other 8.00 5.00 2.00 7.00 4.00 1.00
IA Specialist 8.00 5.00 2.00 7.50 4.50 1.50
IA Technology & Telecommunications 8.00 5.00 2.00 7.25 4.25 1.25
IA Targeted Absolute Return 5.00 2.00 -1.00 4.50 1.50 -1.50

Source: Aegon UK

* Gross-growth rates apply to General Investment Accounts (GIA) gross, Individual Savings Accounts (ISA) or Self-Invested Personal Pension (SIPP) products

** Net-growth rates apply to GIA net products.

IA Unclassified and IA Volatility Managed sector growth rates

Unlike other IA sectors, which have a very clear criteria for the funds within the sector, the IA Unclassified and IA Volatility Managed sectors both have very open criteria .This means they can include different types of funds using a wide range of investment types and strategies.

To ensure that the funds within the IA Unclassified and IA Volatility Managed sectors are given a more representative growth rate we’ve separated them into one of four bands, shown in the table below.

 

IA Unclassified and IA Volatility Managed sector growth rates
  Gross-growth rates* Net-growth rates**
Investment Association (IA) sector< High Mid Low High Med Low
IA Volatility Managed 1 4.00 1.00 -2.00 4.00 1.00 -2.00
IA Volatility Managed 2 4.75 1.75 -1.25 4.50 1.50 -1.50
IA Volatility Managed 3 6.00 3.00 0.00 5.75 2.75 -0.25
IA Volatility Managed 4 7.25 4.25 1.25 6.75 3.75 0.75
IA Unclassified 1 4.00 1.00 -2.00 4.00 1.00 -2.00
IA Unclassified 2 4.75 1.75 -1.25 4.50 1.50 -1.50
IA Unclassified 3 6.00 3.00 0.00 5.75 2.75 -0.25
IA Unclassified 4 7.25 4.25 1.25 6.75 3.75 0.75

Source: Aegon UK


Additional funds/investment types not grouped within an IA Sector:

Additional funds/investment types not grouped within an IA Sector
  Gross-growth rates* Net-growth rates**
  High Mid Low High Med Low
Exchange Traded Funds (ETFs) 4.00 1.00 -2.00 3.75 0.75 -2.25
Investment Trusts 8.00 5.00 2.00 7.25 4.25 1.25
London Stock Exchange (LSE) - Equities 8.00 5.00 2.00 7.25 4.25 1.25

Source: Aegon UK

 

How to find out more about growth rates

We’ve put together a list of commonly asked questions about growth rates, which you can find here.

If there’s anything else you need, you can use our contact formcall or write to us, or tweet us.