Pensions review: Rates of return

"Appendix L of the FSAs Specification of Standards and Procedures, published in October 1994, set out the original rates of return for calculating prospective loss and redress, which applied for the period 1 October 1994 to 31 January 1995. Appendix G set out the rates to be applied when calculating actual loss.

A revised Appendix L and a note of changes to be made to Appendix G were last published by the FSA on 30 July 1999 with effect from 1 August 1999. Details of adjustments to both Appendix L and Appendix G, taking effect from 1 November 1999, are set out in the attached revised Appendices L and G."

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The Financial Services Authority (the FSA) today announced adjustments to the rates of return which should be used for calculating actual and prospective loss and redress for pension transfers and opt outs. These have been made on the basis of actuarial advice received.

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Notes for editors

1. The FSA announced details of its guidance, designed to establish a framework for reviewing past transfers and opt outs, on 25 October 1994. This had as its purpose the provision of redress to people missold personal pensions.

2. One element of the guidance involved periodic review, at three month intervals, of the specified rates of investment return. These rates of return determine how much it costs firms to provide redress by top-up of the personal pension in cases where reinstatement (the preferred form of redress) is not available.

3. At the twentieth review, actuarial advice received by the FSA indicates that, on the basis of current investment conditions, the specified rates of return should be increased compared with those applied in the previous quarter.

4. Copies of the Pension Transfers and Opt Outs: Review of Past Business; Part II: Specification of Standards and Procedures are available from FSA Publications, price 25.00.

5. Copies of the Appendix L assumptions, applying for periods prior to the current quarter are also available on request.

6. The FSA was formerly known as The Securities and Investments Board.