Pensions Bulletin 2025/06

FRC confirms no amendments to AS TM1 as pressure to revisit volatility approach grows 

On 6 February 2024 the Financial Reporting Council confirmed that there will be no immediate changes to the actuarial standard that governs statutory money purchase illustrations. This followed a consultation launched last November (see Pensions Bulletin 2024/44) in which the FRC put forward no change as its intended decision. 

As a result, AS TM1 v5.1 will remain in force for statutory money purchase illustrations performed between 6 April 2025 and 5 April 2026 and so likely feed into the first such illustrations on the pensions dashboard. 

However, the FRC’s response to the consultation reveals that seven out of the eight respondents raised concerns over the suitability of using a fund’s five-year volatility to assign a long-term accumulation rate assumption, with some calling for an urgent review because of misleading results being produced vis-à-vis long-term expectations for certain asset classes. 

Separately, five of the eight respondents commented on the impact of potential different interpretations of the ‘date calculation is performed’ as referenced in AS TM1, pointing out that individuals could find that pensions dashboard illustrations from different providers have been produced inconsistently. 

For its part, the FRC says that it intends to engage with the industry later in 2025 to gain a better understanding of the issues raised in the consultation responses, as part of its ongoing effort to take into consideration its stakeholders’ views. 

Pensions Regulator blogs on pension scam prevention work 

The Pensions Regulator has published a blog on pension scams whose main purpose appears to be to announce that it is building a more comprehensive intelligence picture of pension fraud, including through seconding intelligence experts to the City of London Police and the National Economic Crime Centre. These secondments should also strengthen collaboration between law enforcement and the pensions industry and align the Regulator’s approach with national fraud strategies. 

Pension fraud is still a significant problem with the blog noting that in 2023, a total of £17.7 million was reported lost to pension fraud, with an average loss of nearly £47,000 per person. However, this is a material underestimate of the true position, with the FCA estimating that less than one in five instances of scams are reported. The blog contains the usual pleas to pension savers and the pensions industry to report scams to Action Fraud. It also mentions improvements in the current reporting process, with a phased introduction of a new service underway and continuing throughout 2025.  No details of this are provided. 

There is also mention of “securing stronger legislation”, which is presumably a reference to the flawed Conditions for Transfers Regulations 2021 on which certain fixes have been sought by the pensions industry since its publication (see Pensions Bulletin 2023/25).

The blog concludes with an invitation to attend a “Fighting pension fraud webinar” being held on 25 March 2025.

MPs launch inquiry into use of AI in financial services 

The House of Commons Treasury Committee has started an inquiry into the potential impacts of the increased use of artificial intelligence in banking, pensions and other financial services. The Committee wishes to understand how financial services can utilise AI whilst protecting consumers against potential risks and to that end has launched a call for evidence, with questions arranged under the following headings: 

• How AI is currently being used in different sectors of financial services and how this is likely to change over the next ten years. 
• To what extent AI can improve productivity in financial services. 
• What risks to financial stability arise from AI and how they can be mitigated. 
• What benefits and risks to consumers arise from AI, particularly for vulnerable customers. 
• How Government and financial regulators can strike the right balance between seizing the opportunities of AI whilst protecting consumers and mitigating against any threats to financial stability. 

This call for evidence closes on 17 March 2025. 

FRC announces more signatories to its Stewardship Code as consultation draws to a close 

The Financial Reporting Council has announced the successful signatories to the UK Stewardship Code following the latest round of applications. There are now 297 signatories to the Code, representing £52.3 trillion assets under management. This includes 199 asset managers, 77 asset owners and 21 service providers. LCP was amongst those renewing in this round.

The FRC’s consultation on amendments to the UK Stewardship Code (see Pensions Bulletin 2024/44) closes on 19 February 2025.