The Paris-based umbrella organisation for pensions regulators around the world has come up with a set of good-practice guidelines for telling individuals how much pension they are on track to receive – saying such projections can be a powerful tool, but also warning of possible pitfalls.

Helen Rowell, president of the International Organisation of Pension Supervisors (IOPS), said at the online launch of the guidelines today: “The continued development of pensions, and particularly defined contribution pension provisions, highlights the increasing role and importance of pension projection tools to communicate with, educate and help pension fund members in making their retirement decisions.”

The guidelines produced by the organisation cover topics including the design and presentation of pension projections, as well as their supervision. IOPS develops good practice guidelines for pension supervisory authorities on a range of issues, which are not binding.

Rowell said the guidelines were intended to help supervisory authorities and to highlight the importance of transparency and clear and simple communication around projections.

She said: “With the rapid development of digital technologies, pension projections can become more accessible and more interactive tools to support individuals with that.”

IOPS said pension projections “can indeed be a powerful tool to manage expectations of pension plan members and influence their retirement decisions – for example, the chosen contribution rate, length of saving time, level of risk.”

The forecasts could educate members about likely values of their future retirement income and the effects of retirement decisions taken, but might also pose several risks relating to improper methodology and assumptions or improper communication, the international body warned.

IOPS said it planned to issue a report later this year, going into detail about the ways pension projections could be communicated to pension members and beneficiaries.

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