The Pensions Board of the Actuarial Profession yesterday released a new version of Technical Memorandum TM1 (version 1.1), the key guidance which governs SMPIs. This version, effective from 5 April 2005, contains technical amendments to the existing version 1.0. Changes have been made to paragraph 15.2 and to the assumptions in Appendix D (at paragraphs D1.1 and D4.1), allowing for the fact that mortality is improving at a faster rate for certain groups of people and also involving a reduction of 0.5% in the rate of investment return to be assumed.

This revised version of TM1 is to be applied to all illustrations dated on or after 5 April 2005 and, for this year only, the rate of interest applicable to 15 February 2005 is to be used for all Illustrations with an Illustration date of 5 April 2005.

The new TM1 is available in both Word [.doc] and PDF [.pdf] from the Actuarial Profession’s website.

These changes have been made with the full agreement of the Department for Work and Pensions and Department for Social Development in Northern Ireland and with the knowledge of the FSA. The FSA has recently issued their own consultation which proposes to enable providers to apply the TM1 and FSA bases on a consistent basis from 6 April 2005.