Share

Illustration info

Fund-specific growth rates used in our illustrations

Because of the uncertainty of any future investment returns, we show three example rates of projected investment growth in our product illustrations – low (5%), mid (7%) and high (9%).

These growth rates will now be used as our standard assumptions, but we also use lower rates if we think that the standard assumptions overstate the potential growth of investments held within a particular plan. These lower rates are known as ‘fund-specific’ growth rates. Fund-specific growth rates apply for the following products:

Old Mutual International Isle of Man

  • International Portfolio Bond - Life
  • International Portfolio Bond - Redemption
  • Collective Investment Bond
  • Collective Redemption Bond
  • Managed Capital Account
  • Executive Wealthbuilder Account

Old Mutual International Ireland

  • European Executive Investment Bond
  • European Collective Investment Bond

As the following table shows, each asset is allocated to one of seven types, which determines the growth rates used in calculations.

Table of fund-specific growth rate

Fund type

Typical holding in an asset of this type

Growth rate assumption

Low

Mid

High

Cash Deposit

Money held on deposit within a bank

-1.00%

1.00%

3.00%

Money Markets

Mainly cash/money markets, or combined cash/money markets and fixed interest

-1.00%

1.00%

3.00%

Fixed

Mainly fixed interest

-0.50%

1.50%

3.50%

Low Mixed

Mixed holdings, with at least half in cash/money markets and/or fixed interest

0.75%

2.75%

4.75%

High Mixed

Mixed holdings, with less than half in cash/money markets and/or fixed interest

2.25%

4.25%

6.25%

Equity

Mainly equities

5.00%

7.00%

9.00%

Property

Mainly direct holdings in property

1.50%

3.50%

5.50%

 

The projections for each asset held in a plan are calculated using the relevant fund-specific rates. These are then totaled to provide the combined projection for each of the low, mid and high growth scenarios. We also include an equivalent single growth rate on the illustration for information.

The low, mid and high growth rates used in the above table are worked out using research data provided by an independent company. They are not guaranteed and are not minimum or maximum rates. We review the growth rates each year. The last rates review and the last classification were in April 2015.

Example:

To illustrate the potential growth of a £100,000 investment in an Old Mutual International Collective Bond, with 60% into an equity-type asset, and 40% into a fixed-type asset, we would calculate as follows:

Low growth rate

Equity asset £60,000 growing at 5.00% a year
Fixed asset £40,000 growing at -0.50% a year

Mid growth rate

Equity asset £60,000 growing at 7.00% a year
Fixed asset £40,000 growing at 1.50% a year

High growth rate

Equity asset £60,000 growing at 9.00% a year
Fixed asset £40,000 growing at 3.50% a year