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 2 May 2000 with effect from 1 May 2000.

Updated versions of both Appendix L and Appendix G, taking effect from 1 August 2000, are attached.

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 twenty third review, actuarial advice received by the FSA indicates that, on the basis of current investment conditions, the specified rates of return should remain unchanged from 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.

Appended information

INTEREST RATES FOR ACTUAL LOSS ASSESSMENT APPENDIX G

prospective loss; and

redress.