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PIA Projections Review - Regulatory Update 41

United Kingdom
14/04/1998
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The PIA has recently announced the results of its independent review of the economic and technical basis for the rates used in projections. The report, which was over one year in the making, has concluded that:

Current projection rates are reasonable but, because of an expected slowdown in the rate of economic growth world-wide, an across-the-board reduction in projection rates of 1% is justifiable for the future.

There should be an increase in the real rates used in comparison with SERPS.

There should remain one standard rate of return, rather than differentiating the return rates according to the products on offer.

The PIA has yet to announce whether, and how, it will embrace these recommendations, but has said that if it feels that rule amendments are necessary, then these will be issued in the normal way.

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