What to expect
In good years, we'll aim to award between 0.15% - 0.25% of the value of your retirement savings invested with us. This is on top of any investment growth.
We can't predict the future - so you could get more or less than this. Likewise, we can't guarantee you'll get a ProfitShare award every year.
If you have retirement savings invested in our with profits fund, we'll aim to award between 1.2% - 2.0% of the value of those savings.
To give you a better idea of the difference ProfitShare could make, let's introduce you to Harry.
Harry has just joined his employer's pension plan.
- He's aged 30
- He's decided to contribute £200 each month
- He wants to retire at age 65
Harry’s projected retirement savings
The retirement savings Harry's able to build up by age 65 depends on how his chosen investments grow each year. These figures aren't guaranteed and are just an example. Harry could get more or less than this.
We've assumed his regular contributions will increase each year in line with inflation, he'll contribute until he retires at age 65 and we'll apply a yearly charge of 0.75% to all his regular contributions.
When the price of goods and services go up, it can eat away at the value of your retirement income - meaning your money won't go as far tomorrow as it does today. This is down to inflation.
We've assumed that inflation will reduce the buying power of Harry's retirement savings by 2.5% each year. We've allowed for this by reducing the growth rates to 5.4%, 2.4% and -0.5%. This should give a more realistic view of what Harry could buy with his retirement income if it was payable today.
The annual investment growth rates we've used are over and above assumed future inflation of 2.5%. If a rate is less than 0%, the value of Harry's plan won't keep pace with inflation. This will reduce the amount he can buy with his plan.
The impact of ProfitShare for Harry
Now let's look at the difference ProfitShare could make to Harry's retirement savings, assuming we award 0.20% of the value of his plan each year and his investments grow at the mid-rate of 2.4% each year.
These figures show that over time, ProfitShare could help to increase Harry's retirement savings from £116,324 to £120,908. This would give him an extra £4,584.
You should remember that Harry is only an example and investment returns are never guaranteed. This means that while your retirement savings can grow, their value can also fall. So you could get back less than what you started with.