Commenting on the Financial Reporting Council’s Actuarial Standard Technical Memorandum: AS TM1 Current Versions, Callum Stewart, Head of DC Investment, says:

“We are pleased to see The Financial Reporting Council’s (“FRC’s”) updated Technical Memorandum for the calculation of statutory money purchase illustrations. There is a heightened level of importance placed on this relative to previous versions because of the intended use of these calculations in figures that will be viewed by members in their pension dashboards.

“While we were opposed to the simplistic nature of the original proposals, we are very pleased to see pragmatic changes we suggested are reflected in the final version. In particular, the final methodology will not penalise asset classes that are priced less frequently but could contribute to superior retirement outcomes for members. This will be crucially important as the roll out of pension dashboards coincides with efforts to facilitate meaningful investment by DC schemes in less liquid assets.

“Notwithstanding our support for the change, we retain our view that an outcomes-based approach will be most meaningful in terms of member understanding and engagement. We will welcome opportunities to contribute to wider industry development in this area. In addition, wider benchmarking will be essential to provide more helpful information to savers through their pension dashboard, and help them understand whether their provider is delivering value relative to the market.

“In short, we welcome the revised methodology set out by the FRC, but we will continue driving for wider improvements in terms of outcomes focus and benchmarking across a rapidly evolving DC workplace market.”