FRC consults on proposed changes to Actuarial Standard Technical Memorandum 1
News types: Codes and Standards Announcements, Consultation Announcement, Policies and Responsibilities
Published: 14 February 2022
The FRC has today published a consultation paper on proposed changes to the Actuarial Standard Technical Memorandum 1 (AS TM1) (and its Annex: Exposure Draft of version 5.0 of TM1) to reflect the new environment that will exist once pensions dashboards display Estimated Retirement Income illustrations.
AS TM1 will continue to apply to the Statutory Money Purchase Illustration (SMPI) statements that individuals receive each year. In addition, the the Department for Work and Pensions (DWP) has proposed in their consultation on pensions dashboards that AS TM1 will also determine the illustrations of defined contribution pensions shown on pensions dashboards, from October 2023.
It is essential in this new environment, where individuals will easily be able to compare illustrations from different plans, to ensure consistency between illustrations from different providers and between different types of pension. As such, the proposed changes to AS TM1 include standardising the accumulation rate assumptions and the form of annuitisation at retirement.
DWP has been holding a series of webinars discussing their proposals, and the FRC will be joining the retirement values webinar on 24 February to discuss the proposals for AS TM1.
Mark Babington, Executive Director of Regulatory Standards at the FRC said:
“The FRC is pleased to play a part in such an important Government initiative which will transform the way people engage with their pensions. It is vital that the illustrations displayed are meaningful to individuals. The proposed changes to AS TM1 are essential to ensure it remains fit for purpose in the new era.”
Comments on the questions set out in this consultation document are requested by 6 May 2022. Responses should be sent by email to [email protected].