Our Estimated Growth Rate

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The Smoothed Return Pension Fund uses an Estimated Growth Rate (EGR) to help flatten the ups and downs that come from day-to-day market volatility.

To deliver a robust EGR, we’ve tracked recent market volatility and built our learnings into its design.
We believe this can give you greater confidence in the expected performance of our fund.
 

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Our current EGR -
and historical adjustments

The current and historical EGRs are set out in the table above.

While the unit price of the fund will normally increase in line with the EGR, minus the Annual Management Charge, the unit price can be adjusted if the difference between the Smoothed Price and the Unsmoothed Price moves above pre-set levels.

Each day we check that the Unsmoothed Price is not more than 10% higher or 10% lower than the Smoothed Price. Twice a month there is a further check to make sure that the Unsmoothed Price is not more than 5% higher or 5% lower than the Smoothed Price. Changes to the unit price could arise in relation to a smoothing reset following exceptional inflows or outflows from the Fund. This type of unit price adjustment is reflected in the table above.

How we calculate our EGR

The EGR is calculated using long-term growth expectations of the underlying assets. In order to arrive at the EGR, we use data from external asset management companies who specialise in the analysis of different asset types and how they might perform in future market conditions. The EGR is based on the data supplied to us by the asset management companies. We scrutinise the data used to ensure that the analysis from which it is derived is reasonable and will change the asset management company used if need be.

How we review our EGR

The EGR is reviewed on a quarterly basis. If the review date is due to take place on a non-working day such as a bank holiday, we move the review to the next working day. These reviews can result in an increase, decrease, or no change to the current EGR. If exceptional conditions exist that significantly alter the external asset management company’s outlook of financial markets, we will carry out an additional review of the EGR to update the current rate.