Mark Soper – RetireEasy

Following a report to the FSA by PWC, the City regulator is set to instruct pension providers to reduce their projection rates.

Currently, the FSA allows three different rates to be set: a low growth rate of 5pc, a mid rate of 7pc and a higher rate of 9pc. With many providers failing to deliver a return of 4% p.a. on a pension fund in the last 10 years, PWC believes the providers’ growth projections are too optimistic.

Peter Smith, the head of investments policy at the FSA, said: “It is crucial that projection rates are set at a realistic level so that investors are not misled. Today’s independent research indicates that our maximum projection rates should be reduced.”

It is very important when modelling your retirement finances that any financial assumptions you use are realistic, regularly reviewed and altered where necessary.