FRC consultation on defined contribution pension illustrations, Digi Mart USA News: The Financial Reporting Council (FRC) is consulting on the future development of actuarial standards for defined contribution (DC) pension illustrations. It has published a discussion paper exploring how those standards could support pension illustrations both before and through retirement.
The FRC’s call for feedback forms part of its post-implementation review of Actuarial Standard Technical Memorandum 1 (AS TM1) for Statutory Money Purchase Illustrations (SMPIs). The review covers all potential areas for development, particularly how accumulation rates are determined for investment funds before retirement and the assumptions used to convert the accumulated fund into retirement income.
In a separate discussion paper, the FRC has asked for views on developing new standards for illustrations. This supports the government’s recently published consultation on guided retirement.
The FRC said the standards would be updated to reflect the different ways savers may choose to access their pension savings in retirement.
Specifically, the FRC is consulting on how pension illustrations could show the impact of different default pension benefit solutions before retirement. It is also considering how illustrations could better show withdrawal sustainability and how the remaining pension is converted into income once savers have entered retirement.
FRC executive director of regulatory standards Mark Babington said that for millions of savers, pension illustrations provide an important indication of how their savings today could translate into income in retirement. He added that as DC pensions become increasingly important, savers need information that is clear, consistent and relevant to their needs.
Babington said the FRC is seeking industry views on how pension illustrations should evolve to better support savers before and throughout retirement, as part of its commitment to the government’s pensions reform agenda. The FRC invited feedback from stakeholders with an interest in SMPIs or involved in providing them, including trustees, insurers, wealth managers and administrators.
The deadline for input into both consultations is 26 January 2027.
