New Version of Statutory Money Purchase Illustration Rules Published
The FRC’s Board for Actuarial Standards (BAS) has published a new version (2.0) of Technical Memorandum (TM1): Statutory Money Purchase Illustrations.
TM1 sets out the assumptions to be used in statutory money purchase illustrations (SMPIs).
The changes to TM1, which follow extensive consultation, include restructuring TM1 to make the document shorter and easier to follow with some guidance now included in an accompanying document; updating the mortality assumptions to better reflect current market practice; and 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.
Commenting on the publication of version 2.0 of TM1, 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.”
Version 2.0 of TM1 is available at http://www.frc.org.uk/bas/publications/pub2681.html.
The BAS has published an accompanying document which contains some of the material that was in version 1.4 of TM1. This document is available at http://www.frc.org.uk/bas/publications/pub2682.html.
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 (TM1), which is issued by the Board for Actuarial Standards (BAS). The BAS reviews TM1 regularly.