How does Participation Rate work?

The participation rate decides how much of the increase in the index will be used to calculate index-linked interest (how much your account 'participates' in the upward movement of the index). For example, if the calculated change in the index is 9% and the participation rate is 70%, the index linked interest rate for your annuity will be 6.3% (9% x 70% = 6.3%). A company may set a different participation rate after the 1-year or 2-year index strategies reach their anniversary.