UK - The Society of Pension Consultants is urging the Financial Services Authority to "shelve" plans to change money purchase scheme projections.
In a letter to the FSA, the SPC “strongly” recommended that the regulator halt its attempts to reform the current system which has been the basis of projections for 15 years.
It accused the FSA of “poor timing” and warned that the recommendations were not consistent with existing department for work and pensions calculations.
Projections are used by financial services firms to give customers information about the potential future returns and associated charges from investment products, including money purchase schemes.
The FSA wants to end its “one-size-fits-all” system and plans to provide a clearer, less speculative replacement.
But the SPC warned that the FSA proposals, which will give a maximum projection, do not match DWP calculations introduced last year. These strip out inflation and lower the sums expected because they are expressed in today’s money.
SPC financial services regulation subcommittee chairman Mike Young said the FSA proposals looked “far too optimistic” in the current markets.
He said projections were “inherently wrong” but if they were being introduced, there needed to be consistency across the the FSA and DWP.
Young also claimed that now was not the right time for the FSA to be making changes.
He said: “With the industry waiting to see how the new regulator will act, and trying to take on board simplification legislation, the FSA proposals are inopportune.”
The FSA projection proposals are out for industry consultation until October 5.
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