projection quote for Aviva (Axa Equity and Law) endowment

sparker123

On this years summary the lower forecast was -.5% but the plan is supposed to have a guaranteed return of 3% . Does the guarantee mean that I will get more than the lower assuming I keep it?

The plan is getting near the maturity and I intend to keep it on the assumption that 3% ( although not great at the time it was taken out) is actually quite a reasonable return these days ?

Old_Lifer

A guaranteed return is the minimum you will get. You are correct, you could get more.


Years ago, Retirement Annuities (Personal Pensions) often had guaranteed annuity rates which were set well below the then current annuity rates. At retirement, current (higher) annuity rates were used to calculate the pension, so the guaranteed annuity option was very rarely exercised. Years later, when annuity rates were much lower, the guaranteed annuity options on older policies became much more valuable.

Old_Lifer

For the sake of clarity, in the first line of the above post, it should read 'you could get more than 3per cent.'

sparker123

cheers, Thinking about it I suppose they only guarantee to pay out the minimum return upon maturity is that why they use -.5 as the lower projection o ? it seems a bit odd when it's supposed to be 3% minimum.

Old_Lifer

I have no knowledge of current rates of projection used. Others with more recent experience are better placed to answer that.



At the end of the day, the projection is only an indication and I assume the same rates will be applied to all policies of that type regardless of whether or not they have a guaranteed return.

SonOf

Statement projections are synthetic. They are examples and not reality.

The FCA set the rules on the projection rates and they are very pessimistic at the moment. Plus, they include a further deduction of 2.5% p.a. for inflation.