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FSA wants trees to be updated annually

Decision trees are to be updated every year in line with changes in the Budget, according to proposals by the FSA.

In the consultation paper entitled, Stakeholder Pensions: Maintaining Decision Trees, the FSA sets out how it wants to keep decision trees up to date and accurate.

It suggests that trees are updated annually to incorporate Government policy on income tax rates, basic state pension and pension credits.

The review process will begin from the pre-Budget speech in November, with changes coming into effect at the start of the next financial year.

Firms may also have to amend factual information in the middle of the financial year to reflect any changes in the basic state pension or minimum income guarantee announced in the pre-Budget report.

Estimated monthly pension figures will also have to be updated to keep them in line with Department for Work and Pension money-purchase benefits illustrations.

Firms will be allowed to use inserts to amend information rather than reprinting the trees.

Responses have to be in by March 18 and the FSA plans to introduce the new regime from May 2002.

Scottish Life head of communications Alasdair Buch-anan says: “The danger of decision trees is that they do not always address suitability. It does not matter how often they are updated if the basis on which they work is flawed.”

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