Financial Services Authority (FSA) Announces Pension Transfer Rules are Being Aligned with The Board of Actuarial Standards

28 Feb

I’m pleased to see that the rules are being aligned so both groups will use the same rules and assumed parameters.

The Financial Services Authority (FSA) has outlined plans to change the way pension transfers from defined-benefit to defined-contribution schemes are calculated. The idea being to prevent Defined Benefits being undervalued by the Scheme.

The FSA says the proposed changes :-

  • will ensure assumptions used to calculate pension transfers are consistent and growth rates used for illustrating the comparison to the member are “reasonable”
  • the rules for calculating life expectancy (mortality) will be aligned with those used by the Board for Actuarial Standards, making them consistent with the annual pension statements personal pension holders receive
  • changing the inflation measure used in pension transfer assumptions to take account of the Government’s decision to switch to CPI indexation
  • annuities will be calculated on a gender-equal mortality rate in line with the European Court of Justice’s decision in March 2011
  • the comparison provided to the member when a transfer takes place will have to take into account the likely returns of pension fund assets as well as the transfer of risk from the Defined Benefit Scheme to the member

Any questions please email me :-

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