20 October 2006
The Actuarial Profession has announced revisions to Technical
Memorandum 1 (TM1), Statutory Money Purchase Illustrations.
The changes to Technical Memorandum 1 (TM1), Statutory Money
Purchase Illustrations reflect the coming into force of the civil
partnership legislation and take into account recent changes to
contracting-out rebates and HM Revenue & Customs limits. The
ages used for SMPIs for protected rights have also been brought
into line with those used in FSA point of sale projections.
The revised TM1 has been approved by the Secretary of State for
Work and Pensions and by the Department for Social Development in
Northern Ireland as required by law.
TM1 provides the basis on which pension providers prepare SMPIs
for scheme members. It sets out a single set of assumptions that
are used to illustrate the amount of pension that might be payable
when a member retires, in terms of today's prices. These
illustrations, which apply to a wide range of individual and
occupational money purchase pension arrangements (including
personal pensions, money purchase occupational pension schemes and
stakeholder pensions), were introduced in April 2003 and the basis
was last revised in February 2005.
Gordon Sharp, Chairman of the Actuarial Profession's Pensions
Board, said: "This technical amendment to the rules for calculating
SMPIs ensures that statutory illustrations stay in line with recent
changes in legislation and practice.
"However it is, as always, important to emphasise that such
illustrations can only ever be a guide to assist scheme members
with retirement planning. An illustration represents just one
possible outcome - the actual amount of pension payable on
retirement will ultimately be affected by a wide range of
factors."
