- Typically, this is where there are sub accounts with both uncrystallised and crystallised holdings. In an illustration of an account that has both uncrystallised and crystallised sub-accounts, and withdrawals are only taken from the crystallised pot, Quilter will calculate the critical yield as the growth rate the crystallised fund requires in order for it to provide withdrawals equal to the target amount, and to then provide an annuity at the specified ages equal to that target amount.
- Within this calculation, the crystallised fund is subject to all the charges that are included in the main illustration. The critical yield is not a standalone calculation that only considers the crystallised fund. For this reason, the crystallised fund is reduced not just by the withdrawals assumed, but also by the product, fund and adviser charges that the crystallised fund is subject to and, in addition, the product and adviser charges relating to the uncrystallised fund that are redirected to the crystallised sub-account.
- This is explained in the illustration PDF at the bottom of ‘The product charge’ section and in the ‘Your final adviser fees’ section, where you’ll see this wording: “We will deduct the charges for your uncrystallised sub account from the largest valued crystallised sub account held in your account. Where there are no crystallised sub accounts or insufficient value in the crystallised sub account to meet the value, we will deduct from the uncrystallised sub account.”