View more on these topics

Aegon: FSA projection proposals risk misleading customers

Aegon has warned the FSA’s proposed maximum pension investment projections will force providers and advisers to undervalue potential future returns.

Earlier today, the regulator confirmed plans to reduce the projection rates providers and advisers are required to use to illustrate possible future investment returns to customers.

Currently, firms must project three different rates of return – 5 per cent, 7 per cent and 9 per cent – for tax advantaged products such as personal pensions. The regulator proposes reducing these rates to 2 per cent, 5 per cent and 8 per cent.

FSA director of conduct policy Sheila Nicoll emphasised that the proposed projected returns are “maximum levels”.

The regulator’s recommendations were informed by a report by PricewaterhouseCoopers. The PwC report bases its proposed projection rates on a fund with 57 per cent equities, 23 per cent government bonds, 10 per cent property and 10 per cent corporate bonds.

Aegon head of regulatory strategy Steven Cameron (pictured) says the maximum return should be based on a pension which is invested 100 per cent in equities.

He says: “The FSA is trying to come up with a projection figure which nobody should ever exceed.

“It makes no sense to base that cap on a fund which is invested 57 per cent in equities. If it is a cap the FSA wants to set it should base this on a fund invested 100 per cent in equities.

“If we give an unduly pessimistic figure, you could argue we are misleading customers into thinking they need to contribute more than they actually need.”



FSA confirms plans to cut projection rates

The FSA has confirmed plans to cut the projection rates providers and advisers are required to use to illustrate potential future investment returns. Currently, firms must project three different possible rates of return – 5 per cent, 7 per cent and 9 per cent – for tax advantaged products such as personal pensions. The regulator […]

Sesame launches risk profiling tool

Sesame Bankhall Group has launched a new risk profiling tool for advisers using Barrie & Hibbert, Oxford Risk and software provider Iress. The tool, Risk Profiler, will use 18 psychometric questions, designed by Oxford Risk and four suitability questions from Sesame to help evaluate risk tolerance. Iress is used to produce tailored client reports, explain […]

Investec launches commission-free structured products

Investec Structured Products has launched two auto-call structured product plans that have no commission built into the products alongside two identical plans with commission. This gives advisers a glimpse of what commission-free structured products look like, as Investec is an early mover into creating RDR-ready products. Investec has launched almost identical plans in their FTSE […]

Reyker passes delayed income payments to Merchant Capital clients

Reyker Securities says it has now made the majority of delayed income payments to Merchant Capital clients after it received the income from a number of counterparty banks. The firm says some clients have yet to be paid where verifications and queries need to be resolved. Reyker says income paid prior to March 9 and […]


Lifetime Isa – how it works

According to George Osborne “people like Isas – because they’re simple”. Fiona Tait is not convinced… Contributions & bonuses What he said: “From April 2017, anyone under the age of 40 will be able to open a Lifetime Isa and save up to £4,000 each year. And for every £4 you save, the Government will […]


News and expert analysis straight to your inbox

Sign up


There are 5 comments at the moment, we would love to hear your opinion too.

  1. This is all cobblers; nobody can predict the future at all let alone to a maximum or minimum level. It would be better to say ‘we haven’t the faintest idea what you’ll get back but these investments are more risky than these but have in the past (our only real measure) have done better’. Two factual statements on which a decision can be made, job done.

  2. William Watling 31st May 2012 at 3:54 pm

    I strongly urge the FSA to make it absolutely clear how projections should be calculated going forward in ‘real world’ terms. i.e. asset allocation driven growth rates (inc the amount people intend to have in their ‘cash a/cs’, interest rate disclosure (so all provider charges explicit & implicit are included), adviser charges, wrapper charges, platform charges, etc as a single RIY. This way advisers & consumers will be able to make meaningful comparisons & decisions from them.

    Allowing each co. to ‘interpret’ the rules differently is leading to confusion, unnecessary systems development cost and hindering ‘transparent disclosure’.

  3. What rubbish, how can you possibly justify saying that you should be able to project at high rates? That only misleads clients, I always live by the rule of underpromise, overdeliver. I think providers may be more worried about the lower rates, which after charges, could show negitive growth rates!

  4. Of course, Aegon never mislead their clients (IFA’s) – I think not. A company, never to be trusted.

  5. Fact of life – for a customer, low illustrations are a reason not to buy or not to keep a pension.

    Heavens forbid that anyone should mislead the public into saving for their future. Far better that they see a version of reality which ends in them doing nothing at all.

    Thank God somebody misled my clients 25 years ago, or I would have no big funds to play with now.

    It’s not PC but admit it’s true. I won’t be sitting in front of Mr £250 pm self employed, educating him about reality. Nor will you!

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm