The FRC has published a consultation on proposed changes to Actuarial Standard Technical Memorandum 1. AS TM1 sets out the assumptions to use for statutory money purchase illustrations (SMPIs). We understand from the FRC that the revised assumptions would apply to SMPIs with effective dates from 6 April 2024 to 5 April 2025 (rather than if the date the calculations are actually performed falls in this period).
The FRC proposes increasing the accumulation rate assumption for volatility groups 1 to 3 by 1% pa with no change to the accumulation assumption of 7% pa for group 4. The volatility band ranges, the inflation assumption of 2.5% pa or any other set assumptions and methodology is unchanged. (AS TM1 specifies that some assumptions update each year and these may well change: annuity rates are based on yields on 15 February 2024 and the CMI projection model appropriate to the tax year of the illustration date).
The consultation deadline is 4 December 2023. FRC expects to confirm the assumptions by 15 February 2024.
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