FRC announces changes to AS TM1 to make pension projections more consistent and reliable
News types: Codes and Standards Announcements, Consultation Announcement, Guidance, Policies and Responsibilities, Policy Statements, Publications, Statements
Published: 7 October 2022
The FRC has today announced changes to the Actuarial Standard Technical Memorandum 1 (AS TM1) to support consistent and reliable pension illustrations for defined contribution pension scheme members.
The changes to AS TM1 include standardising the accumulation rate assumptions and the form of annuitisation at retirement.
The new standard is a major step change to increase consistency between pension projections once they start to be provided to pensions dashboards from October 2023.
AS TM1 will continue to apply to the Statutory Money Purchase Illustration (SMPI) statements that individuals receive each year. In addition, the Department for Work and Pensions (DWP) intends for AS TM1 to determine the illustrations of defined contribution pensions shown on pensions dashboards, from October 2023.
It is essential that pension scheme members can have confidence in the consistency and reliability of any projections from different pension providers when they are shown side by side on pensions dashboards.
Mark Babington, Executive Director of Regulatory Standards at the FRC said:
“The development of a consistent and reliable pension projection is a major step-change which will help users better understand their pension projections and to plan for their retirement.
From the extensive engagement with stakeholders and industry it is clear that there is overwhelming support for projections to be consistent across different pension plans.
The FRC looks forward to continuing to work collaboratively with pension providers and other stakeholders ahead of the standard being effective from October 2023.”
The FRC will be hosting a webinar on Friday 14 October at 10:30am to discuss the changes in more detail.
The FRC has also recorded a podcast with the Department for Work and Pensions (DWP) which highlights the background to the changes and a discussion on pensions dashboards.