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NEW PENSION ILLUSTRATIONS TO HELP PLANNING FOR RETIREMENT

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An important new tool to help people plan for a secure and ...
An important new tool to help people plan for a secure and

comfortable retirement is being launched by the government.

The government is due to introduce legislation next year that will

mean people with money-purchase occupational pensions, personal

pensions and stakeholder pensions will be given an illustration each

year outlining what they are likely to get when they retire.

Social security minister Jeff Rooker today launched the consultation

paper prepared jointly by the DSS and the Faculty and Institute of

Actuaries. It sets out how pension providers will have to calculate

illustrations.

Mr Rooker said:

'People need as much information as possible to plan for their

retirement. They want an annual piece of paper that will give them a

good idea - in plain English and with meaningful figures - of what

they will get from their pension.

'The difficulty with money-purchase schemes is the lack of certainty

about how investments bought from the contributions will perform in

the future. Providing illustrations in such circumstances is a

challenge but one that is important to meet for the sake of

tomorrow's pensioners.

'I am grateful for the work put in by the Faculty and Institute of

Actuaries, which chaired the working party that developed these

proposals. We now want to consult with the industry and get it

right,' Mr Rooker added.

NOTES

1. The proposal to require money purchase schemes to provide

information about future benefits was first discussed in the

Pensions Green Paper in December 1998.

2. The changes will be introduced by means of amendments to

existing disclosure of information regulations. A Technical

Memorandum issued by the Faculty and Institute of Actuaries will

set out how the illustrations are to be calculated.

3. The necessary changes to regulation making powers are in

section 52 of the Child Support, Pensions and Social Security Act

2000.

4. The new requirements will start from April 2002, but the

regulations and the Technical Memorandum will be available in

early 2001 so that schemes can start earlier if they wish.

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