Mark Babington: We are seeking industry views on how pension illustrations should evolve to better support savers both before and throughout retirement.
The Financial Reporting Council (FRC) has launched two reviews looking at how actuarial standards for pensions illustrations should develop to continue supporting savers' retirement planning.
The standards body said it had today (3 November) published a call for feedback as part of the post implementation review of actuarial standard technical memorandum 1 (AS TM1) for statutory money purchase illustrations, alongside a discussion paper seeking views on how future standards could support pension illustrations both before and throughout retirement.
It said feedback from these reviews would underpin its work to support the government's guided retirement initiatives.
AS TM1 provides actuarial practitioners with the necessary assumptions and methods used in the calculation of statutory illustrations of money purchase, or defined contribution pensions.
The FRC said its call for feedback was looking for views on all potential areas for development of AS TM1 but was particularly seeking feedback on two key areas – the method for determining the accumulation rates to be used for investment funds pre-retirement; and the assumption on how the accumulated fund is converted into an income at retirement.
In addition to reviewing AS TM1, the FRC said its discussion paper was seeking views on developing new standards for illustrations.
It said these standards would seek to modernise illustrations so they can reflect the different ways savers may choose to access and use their pension savings in retirement.
The FRC said it was particularly looking for views on how pension illustrations issued before retirement could be developed to show the impact of different default pension benefit solutions. For illustrations provided during retirement, it said views were being sought on how sustainability of withdrawals should be illustrated and how to illustrate converting the remaining pension pot to an estimated lifetime income.
The FRC said the deadline for feedback for both papers was 26 January 2027.
FRC executive director of regulatory standards Mark Babington said: "For millions of savers, pension illustrations provide an important indication of how their savings today could translate into income in retirement. As defined contribution pensions become increasingly important, it is vital that savers receive information that is clear, consistent and relevant to their needs.
"As part of our commitment to supporting the government's pensions reform agenda and the ambition set out its roadmap to deliver a pensions system fit for the 21st century, we are seeking industry views on how pension illustrations should evolve to better support savers both before and throughout retirement."
Pensions minister Torsten Bell added: "Private sector workers deserve a much better deal when it comes to pensions. They are doing the right thing and saving for retirement, but when they get there too many are left without a genuine pension.
"We are resurrecting proper pensions for private sectors workers, guaranteeing them the option of an income that last throughout retirement and in many cases protection against the rising cost of living - things public sector workers take for granted.
"We are going to give pensions back to the people who are working hard and saving for their retirement."
