Pensions - Articles - Concerns over FRCs radical proposals

 Commenting on the response, Peter Williams, Chair of the ACA Pension Schemes Committee, said: “We support the general principle of amending AS TM1 to provide greater consistency for recipients of SMPIs where individuals have several different pension policies, particularly in the context of information to be provided on pension dashboards.

 “However, the proposals on accumulation rates are radical, and we think that they can create problems of understanding for individuals and significant additional work for fund managers in many cases. The proposals can also create anomalies when, for example, bond funds prices are volatile. On balance, recognising that the SMPI will be indicative only, we would prefer an asset-class based approach, which is the approach most schemes adopt currently.

 “We note that most individuals do not take annuities at retirement, and further thought should therefore be given to the form of benefits to illustrate to better match what individuals would typically do when they take benefits. We appreciate that this would take some time, and that the annuity approach may need to be maintained for a period.

 “Given the Government’s proposal that all DC projections for the Dashboard are covered by AS TM1, we believe AS TM1 should refer to and give guidance on any additional projections for the Dashboard not currently referred to in AS TM1, such as projections based on the accrued fund referred to in the draft Dashboard Regulations. However, AS TM1 should reflect the final Dashboard Regulations.”
  

 ACA response to TMI consultation