FSA confirms plans to cut pension projection rates

FSA Skywards Tower 480

The FSA has confirmed plans to cut the projected investment returns pension providers must use when providing illustrations to customers.

The change, which is based on recommendations from PricewaterhouseCoopers, means projection rates will be cut from 5 per cent, 7 per cent and 9 per cent to 2 per cent, 5 per cent and 8 per cent.

The new rates will come into force from 6 April 2014, although firms will be able to comply voluntarily from 6 April next year.

The change comes despite industry concern that the approach will result in providers undervaluing potential investment returns.