New Statutory Money Purchase Illustration Guidelines
The FRC’s Board for Actuarial Standards (BAS) has released a new version of its guidelines on statutory money purchase illustrations and says providers must make sure that these are based on realistic assumptions about investment returns.
The Technical Memorandum (TM1): Statutory Money Purchase Illustrationssets out the assumptions to be used in statutory money purchase illustrations (SMPIs) and includes a number of changes following an extensive consultation exercise.
These changes include restructuring TM1 to make the document shorter and easier to follow with some guidance now included in an accompanying document as well as updating the mortality assumptions to better reflect current market practice.
Version 2.0 of TM1 also contains text which emphasises that providers of SMPIs must take proper account of potential investment returns when setting the long-term investment assumption used in their projections.
Jim Sutcliffe, chairman of the BAS, said: ‘Statutory money purchase illustrations play an important part in helping individuals understand how much they have saved towards their pensions and what they might get in retirement. We have amended TM1 to make it clear that we want providers of SMPIs, and the actuaries who advise them, to ensure that the investment assumption used in projections is achievable.’