The Board for Actuarial Standards has published an exposure draft of version 2.0 of technical memorandum TM1 (requirements for statutory money purchase illustrations), intended to apply to SMPIs issued from 6 April 2012. Consultation closes on 10 June 2011.
The main change is the proposal that the accumulation rate should be based on the expected return from the asset classes that members invest in over the period to retirement. BAS is concerned that the current maximum seven per cent accumulation rate is being used too widely and asks whether this maximum should be retained, reduced or abolished.
Other changes include a requirement to use the same mortality tables for men and women in calculating annuity rates following the Test-Achats case (see Pensions Update, March 2011) and the removal of references to DC contracting-out, in view of its abolition from April 2012.