FSA to probe pension firms on projection rates
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The FSA will be running checks on pension providers to ensure they are not still using standard projection rates for cash and fixed-interest funds.
The regulator plans to carry out a phone survey and desk-based review of providers later this year after repeated warnings to stop using the 5, 7 and 9 per cent growth rates.
The majority of pension providers are declaring their fund-specific projection rates although it is understood that those not complying could be referred to FSA enforcement.
In August, O&M Systems war-ned in Money Marketing that fund-specific projection rates can vary by as much as 1.5 per cent. The firm has called for guidance from the FSA as there is no market consistency on quotes from different providers.
Director Graham Miller says: “Authorised firms have a requirement for communications to be “fair, clear and not misleading” but it seems that it will be OK for five providers to quote totally different growth rates for the same fund and all be right.”
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