Proposed new rules for actuarial advice should be revised to reduce unnecessary communication and complexity, according to the Society of Pension Professionals (SPP).
The society was responding to the Financial Reporting Council’s (FRC) consultation on revisions to the Technical Actuarial Standard for pensions, known as TAS 300.
The FRC published its proposed changes to the Technical Actuarial Standard in December. These included changes to how actuaries communicate the relationship between prudence and covenant risk, and how they advise open defined benefit pension schemes.
The proposals are designed to reflect changes to the Defined Benefit (DB) Funding Code, introduced by the Pensions Regulator last year. They also include updated rules regarding the use of surplus.
Chris Ramsey, chairman of the SPP’s DB committee, said the FRC had “done a good job in dealing with what is an increasingly complex area”.
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“However, there are some improvements that could be made, both for clarity and to reduce the amount of work needed that wouldn’t add material value to the advice,” he added. “If these changes are made, the new Technical Actuarial Standard for pensions is likely to provide strong support for practitioners carrying out actuarial work under the new DB funding regime.”
In its response, the SPP said the revisions were “sympathetic” to the challenges faced by actuaries, but some of the new provisions “introduce additional prescription that would best be avoided”.
The SPP said further revisions may be needed to the rules governing how actuaries communicate a scheme’s recommended level of prudence – how conservative they have been with estimates used in valuations.
The society said the proposed changes to TAS 300 ran the risk of actuaries feeling the need to quantify prudence when justifying it.
It also said some changes to the standards added materially to the advice required and were unnecessary in their current form. These included a proposed provision relating to the uncertainty of future cashflows.
The consultation closes on 10 March.
