FRC consults on actuarial assumptions used in pension scheme projections
News types: Consultation Announcement
Published: 31 May 2012
BAS PN 43
The FRC and FSA have published a joint consultation paper today which sets out proposals to change the assumptions used in projections of the returns from financial products including pensions.
The FSA is proposing to reduce the intermediate projection rate for tax advantaged retail investment products such as personal pensions from 7% to 5%. The FRC is seeking views on whether the maximum projection rate used in Statutory Money Purchase Illustrations (SMPIs) should also be reduced from 7% pa to 5% pa or whether the maximum rate should be removed.
The consultation is available here.
Commenting on the consultation, Jim Sutcliffe, Chairman of the FRC’s Board for Actuarial Standards, said:
The FRC and FSA have published a joint consultation paper today which sets out proposals to change the assumptions used in projections of the returns from financial products including pensions.
The FSA is proposing to reduce the intermediate projection rate for tax advantaged retail investment products such as personal pensions from 7% to 5%. The FRC is seeking views on whether the maximum projection rate used in Statutory Money Purchase Illustrations (SMPIs) should also be reduced from 7% pa to 5% pa or whether the maximum rate should be removed.
The consultation is available here.
Commenting on the consultation, Jim Sutcliffe, Chairman of the FRC’s Board for Actuarial Standards, said:
“Millions of people receive Statutory Money Purchase Illustrations every year. These illustrations contain important information about how much people have already saved towards their pensions and what they might receive at retirement. The assumptions used for future returns need to be justifiable and reasonable.”
Notes to editors
- The Board for Actuarial Standards has a primary objective of promoting competence and transparency of actuarial practice by establishing and improving actuarial technical standards and ensuring that they are coherent, consistent and comprehensive.
- The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.
- Since 6 April 2003, members of certain money purchase pension arrangements must be provided with Statutory Money Purchase Illustrations (SMPIs). SMPIs are produced in accordance with Technical Memorandum 1: Statutory Money Purchase Illustrations(Actuarial Standard TM1), which is issued by the FRC’s Board for Actuarial Standards.
- The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. One of the FRC’s objectives is to promote competence and transparency of actuarial practice by establishing and improving actuarial technical standards and ensuring that they are coherent, consistent and comprehensive.