FRC: AS TM1 assumptions to remain unchanged

6 Jun 2019 09:56 AM

The FRC has conducted a review of the assumptions set within Actuarial Standard Technical Memorandum 1 (AS TM1) that are mandated for use in the annual Statutory Money Purchase Illustrations (SMPIs) received by people saving for retirement in defined contribution pension plans.

Each year there are over 30 million SMPIs produced in respect of these defined contribution plans.

We concluded that no change will be made to the assumptions and that the current version (V 4.2) will remain in force for SMPIs produced in the year beginning 6 April 2020.  The main reasons for this conclusion are: 

Given these initiatives and uncertainties it was concluded that now is not the time to make changes to the AS TM1 assumptions.

As such the current version of AS TM1 (version 4.2) will remain in force until further notice.  However, as the above initiatives progress, it will be important for their impact to be reflected in subsequent versions of the pension projection assumptions.

The FRC has responsibility to set and maintain the assumptions used to produce the Statutory Money Purchase Illustrations (SMPIs) sent annually to individuals who have Defined Contribution (DC) pension plans.

To meet this responsibility FRC reviews the assumptions in AS TM1 which governs these illustrations against the background of current and anticipated economic and demographic experience.  In addition, we monitor those assumptions in which providers have a degree of flexibility (for example the choice of accumulation rates to be used in the projection).

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