The industry regulator, the Financial Services Authority, looks to have postponed plans to launch a new set of literature standards for insurance and investment related contracts. The "Key Facts" discussion paper has been put on hold pending a review of the assumed growth rates that providers used in quotations. For example, currently for pensions quotations, growth rate projections to give you, the consumer, an idea of what you may receive at maturity are 5%, 7% and 9% pa.
Our View:
These high assumed growth rates do not offer a fair and clear projection of likely returns for an investor given that interest rates returns are at an all time low and stock markets are particularly poor, although improving. It is sensible to review projection rates before asking providers to spend millions on revamping literature and quotation systems.