Financial Services Authority cuts its pension projections

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The FSA said new projections will give savers a more realistic idea what pension they can expect Photo:

The Financial Services Authority has lowered its official standard projection rates for pension plans.

It said new projections will give savers a more realistic idea of what pension they can expect.

Firms use the FSA's projection rates to show what returns an investor might receive - they are not a firm guarantee but they give a flavour of what people might gain from their investment.

They must use use new rates from April 2014.

ITV News' Economics Editor Richard Edgar reports:

This is how the new pension projections would affect a 22-year-old earning £30,000 who contributes just under £2,000 annually to their pension:

  • At present, they would be told their pension is worth £10,300 on retirement at 68, based on a mid-point growth rate of 7%.
  • Under the new rates, the projected income would be £6,400, using the new mid-point growth rate of 5%.