How we set our growth rates

What we do and why

In our illustrations for our pension and life products, we use growth rates based on the actual funds being invested in.

The rate for each fund is determined by considering the asset allocation of the fund and assumed return for each asset class.

It's important to remember that the plan values we show in our illustrations are only a guide and are not guaranteed in any way, and you may get back less than the amount originally invested.

You can see the rates we've used for our asset classes and funds below:

Asset Class Growth Rates

We currently use the following asset class growth rates in our illustrations: 

 Asset Class Pensions  Life 
Cash -2.40% 0.60% 3.60% -2.90% 0.10% 3.10%
Gilts -1.70% 1.30% 4.30% -2.20% 0.80% 3.80%
Corporate Bonds -1.30% 1.70% 4.70% -1.80% 1.20% 4.20%
Index Linked Bonds -1.80% 1.20% 4.20% -2.30% 0.70% 3.70%
Property 1.00% 4.00% 7.00% 0.50% 3.50% 6.50%
UK Equity 2.00% 5.00% 8.00% 1.50% 4.50% 7.50%
Developed Market Equity 2.00% 5.00% 8.00% 1.50% 4.50% 7.50%
Absolute Return -1.50% 1.50% 4.50% -2.00% 1.00% 4.00%
Commodities -1.00% 2.00% 5.00% -1.50% 1.50% 4.50%
Global High Yield 0.30% 3.30% 6.30% -0.20% 2.80% 5.80%
Emerging Markets Equity*  2.00% 5.00% 8.00% 1.50% 4.50% 7.50%

*Pension rates have been capped at 2%/5%/8% and Life funds have been capped at 1.5%/4.5%/7.5% as per FCA guidelines.

These growth rates are reviewed on a regular basis and show a 3.0% spread between the Low and Mid, and between the Mid and High rates.

LEAF and Moody’s Analytics

The Asset Class Growth Rates are set by Royal London’s Long-term Economic Assumptions Forum (LEAF).

The forum sets these rates by reviewing a variety of data to determine what a suitable growth rate assumption might be for each of the asset classes listed above.

The main source of the data used by LEAF is provided by risk management consultants Moody’s Analytics. The Moody’s Analytics model is acknowledged as an industry-leading tool for predicting future investment returns across many different asset classes. It takes into account many decades of historical investment return data as well as various future indicators of returns.

More information about Moody’s Analytics can be found at their website

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.