The FCA set the guidelines on assumptions that can be used for illustrations, and this is the basis for the assumptions used in our Illustration tool. 

In deciding the appropriate rates, our Illustration provider analyses the asset mix of funds involved in the projection. Assets are grouped into the following “asset classes”.

• Equity
• Gilts
• Bonds
• Other

The current assumptions used are as follows:

If you are running an illustration for a model - Growth rates are based on the Portfolio Asset Mix of the model (inputted manually by the user that creates the model) 

If you are running an illustration for a single asset or selection of assets - Growth rates used are on the “Other” category.

We have made assumptions about the potential performance of each asset class. The assumptions about the potential performance of each asset class are based on analysis of future Gross Domestic Product (GDP) growth, inflation, interest rates, government bond yields, and their impact on the future performance of each asset class. These are in line with the FCA's prescribed maximum rates of return that financial services companies must use in calculations when providing retail customers with projections of future benefits (outlined in COBS 13 Annex 2). 

For Other, the rates are set by considering the Bank of England base rate and current long-term interest rates available. Growth rates are inflation-adjusted. We calculate the low, mid, and high growth rate for each asset, allowing for the proportion invested in each asset class.

Additionally, tax-disadvantaged products (GIAs) are adjusted by 0.5%, as prescribed by FCA requirements.