This is because the pension illustration uses a compound interest calculation to derive the growth rate after inflation, (1 + unadjusted growth rate)/ (1 + inflation) = (1 + adjusted growth rate).
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Answers in this section
- Is there a more appropriate means to compare charges than annuity purchase critical yield?
- Is annuity purchase critical yield the most appropriate measure to use with clients?
- Is there a means of producing a standalone annuity purchase critical yield calculation for crystallised sub accounts?
- Why does Old Mutual Wealth take all the charges for both crystallised and uncrystallised money from the crystallised sub account?
- Why does the annuity purchase critical yield on the last page of crystallised quotes look so high?
- Why is the reduction in yield higher/lower than expected?
- Why is the uncrystallised value at 5/10 years showing as zero?
- Why is there no uncrystallised value projected after the selected retirement age/date?
- Why is the ‘initial yearly income’ on my client’s yearly pension forecast much larger than in the previous forecast?
- Why has my client received two ‘yearly pension forecast’ statements within a few months of each other?