Upcoming change to how we calculate projected pension values
At Royal London, we understand the importance of making things as clear and simple as possible for you and your clients. That’s why we want to inform you of an upcoming industry change that will impact how we calculate projected pension values for your clients.
To give your clients an idea of what their pension might be worth in the future, we use assumptions to calculate what they might get back.
Until now, the projected pension value on your clients’ annual statements has been determined based on our expectations for future fund performance. However, from October 2023 - all pension providers must adopt a standard approach. This will be based on how the performance of your clients’ funds has varied in the past five years.
This change in approach means your clients may see more of a difference in their projected pension value, compared to last year.
Why are things changing?
The reason for this is to establish consistency in the assumptions used by different pension providers in their annual statement projections, allowing customers to compare their pension plans more easily.
What to anticipate?
Your clients may see a more notable difference in their projected pension value, compared to last year’s statement. It’s important to stress that this change only affects the projected values and does not change their actual pension value.
Please remind clients that projected values are not guaranteed, and the actual worth of their pension may fluctuate due to various factors.
To help clients monitor the performance of their savings, both last year and this year’s policy values are included in their statements. These values offer a clear overview of how their pensions are evolving over time.
How are we communicating this to clients?
From 1 October we’ll be including this insert with your clients’ annual statements to clearly explain what this change means for them.
Need More information?
If you want more detail on these changes visit royallondon.com/projection-changes.
If you have any other questions or require additional clarification regarding how these changes impact your clients or your business, please get in touch with your usual Royal London contact.