The chart below compares the future income from a with profit annuity.
The anticipated bonus is 3% and the projections are based on investment
returns of 5%,7% and 9%.
The Financial Services Authority (FSA) lays down rules for projecting with
annuities. Currently companies must use future investment returns of 5%,7%
and 9% when producing illustrations.
It is important to note that the projections are based on a net investment rate (after charges), and this has the effect of bringing investment returns of 5% a year down to 3.7% a year and 9% a year down to 7.7% a year
With profit annuity for a man aged 60, female 57, joint life annuity with
2/3rds widows. The anticipated bonus is 3.%