my rubbish endownment

Dick_here

So what is the point of projections ? They just seem to add confusion, rather than help in any way.

dunstonh

!!!!!!_here wrote: »

So what is the point of projections ? They just seem to add confusion, rather than help in any way.

On unit linked contracts they work well. However, on conventional with profits contracts they were not really designed for those and some old plans just dont have the capability of turning out an accurate projection.

The projection rates are set by the FSA although companies can use lower rates if they wish but cannot use higher. They are just examples and you need to look at the information in conjunction with the investments you have. In a way it helps you decide risk and reward being taken. A projection showing small shortfall but investing in areas of good potential would be "expected" to hit target. A projection with a large shortfall in a naff fund should get the alarm bells sounding. However, you cannot look at just one thing alone. Its part of the information but not the whole story.

Dick_here

It's chicken and egg though, dunston.

Most people - I suspect - decide whether their fund is ok or naff based upon the projections ! It certainly seems like the easiest way to do it...

EdInvestor

!!!!!!_here wrote: »

It's chicken and egg though, dunston.

Most people - I suspect - decide whether their fund is ok or naff based upon the projections ! It certainly seems like the easiest way to do it...

With a WP endowment they can be an indicator - eg if the company is using 3%,4% and 5% for its projections you can be pretty sure the fund is naff.Whereas a company using 4%,6% and 8% is more likely to produce a decent return.

To be sure the projection rates reflect reality, it's worth checking the investment profile of the WP fund ( how much in equities and property, vs how much in bonds and cash) to make sure it matches the projection rates used.