Projection of benefits or reduction in yield

Projection of benefits or reduction in yield

Ed Evans

IMPORTANT – This user tip relates to an older version of Genovo. Although much of the content and many of the concepts still apply to the current version of Genovo, the screenshots and some instructions may no longer be accurate.

It is a key requirement, amongst others, of the FCA’s guidance in respect to replacement business for advisers to conduct a cost comparison of the ceding and new plan and to present this to the client in a manner that is easy to understand. In relation to pension switching cases this has traditionally been achieved by including a projection of benefits comparison within the suitability report. However there is an all to frequently overlooked alternative – a reduction in yield comparison, and I am increasingly convinced of its merits.

Projection of Benefits


  • It’s a familiar way of doing things.
  • You can obtain the information free of charge for both the ceding and new plan from the relevant providers.
  • There are various software solutions such as SelectaPension or O&M Profiler that will calculate the projected benefits for you.


  • It’s a rather esoteric and confusing way of comparing charges.
  • The information obtained from providers is frequently wrong.
  • It can take weeks for the provider to issue the required information.
  • Different providers use different growth rates, bases and assumptions which can make a meaningful comparison very difficult (Albeit this process is made significantly easier if you use one of the aforementioned software solutions).
  • Should projected funds be shown as nominal values or in today’s terms?
  • Potentially builds false expectations as to what the client may receive in retirement.

Reduction in Yield


  • It is specifically highlighted as good practice in the FCA’s guidance notes (see page 10).
  • Provides a less misleading, and more accurate and meaningful comparison of charges.
  • Clearly demonstrates the impact that the charges will have over the intended investment period.
  • I believe it’s an easier concept for a layman to understand.
  • There’s less data for the client to process.
  • The same software solutions that calculate the projected benefits will also calculate the reduction in yield.
  • The reduction in yield of the new plan will be detailed in the provider’s illustration.
  • It is relatively straight forward to calculate the reduction in yield of existing unit-linked plans yourself.


  • It does require a little maths to calculate the RIY of the ceding plan.
  • You may need to create a little calculator in Excel to calculate the reduction in yield of the ceding plan.
  • It can be difficult to obtain the required information to calculate the reduction in yield of a ceding plan invested in a traditional with profit fund.

Genovo has always included a reduction in yield comparison for replacement business. However, I’d love to know what you think. Does the above reflect your experiences? How do you compare the charges of pensions? Do you include a projection of benefits or reduction in yield comparison in your suitability reports, or do you signpost the client to a separate report? Please leave a comment below and let me know your thoughts, and I promise I’ll get back to you.

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5 thoughts on "Projection of benefits or reduction in yield"

  1. Ed Evans says:

    Having done a bit of searching on the web it looks like Scottish Widows offer a free RIY calculator It’s obviously tailored to the SW and their Retirement Account but looks like it could still do a job. Can’t test it for myself as we don’t have an Agency Number.

  2. Ed Evans says:

    Just to let you all know that we’ve implemented a solution that now lets users include a projected fund and critical yield comparison instead of, or as well as, a reduction in yield comparison in their reports. Please drop us an email for further info.

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