Research Services for Pensions illustrations: presenting uncertainty and variability

BACKGROUND

The FRC is the UK's independent regulator responsible for issuing and maintaining technical actuarial standards. It is responsible for Actuarial Standard Technical Memorandum 1 (AS TM1), which specifies the assumptions and methods used to calculate statutory illustrations of money purchase, or defined contribution, pensions.

Pension illustrations are based on assumptions about future investment returns, inflation and retirement choices. The uncertainty and variability inherent in future retirement outcomes can be challenging for defined contribution (DC) savers to understand. The FRC is interested in how this uncertainty and variability can be communicated clearly and effectively to support savers in understanding and assessing the adequacy of their pension arrangements.

PURPOSE

This research will gather evidence on how information can be presented to help DC savers understand the uncertainty and variability of their estimated pension income. It will inform the development of pension illustrations and related communications and support savers in understanding and assessing the adequacy of their pension arrangements.

The FRC is considering the information provided in the following contexts:

• For pensions illustrations given to DC savers in early- and mid-career, there are uncertainties in the estimates of projected pension income; the further away from retirement, the greater the uncertainty.
• For pensions illustrations given to DC savers approaching retirement, there is uncertainty and variability in both the amount and pattern of income beyond the first point of accessing DC savings.

The primary focus of the research will be on the presentation of pensions illustrations information. The successful contractor(s) will therefore need strong knowledge and experience of savers' behavioural responses to such information; they will also need sufficient technical knowledge of the investment, inflation, longevity and retirement timing risks inherent to pensions planning.

SCOPE

The research project will comprise three phases:

1. Literature review of the relevant academic and professional expert research in this area.
2. Solution development - drawing on phase 1, the successful contractor(s) will work closely with the FRC policy team to develop a range of potentially viable solutions for communicating DC pensions uncertainty and variability.

Activities will include:

• developing alternative wording and narrative approaches;
• developing presentation formats and visualisations;
• considering how savers may interpret and respond to communications;
• assessing the extent to which communications may support informed decision-making.

Outputs will include:

• behavioural design principles;
• prototype communications;
• visual mock-ups;
• supporting rationale for proposed approaches.

3. Empirical testing - drawing on phase 2, the FRC will select the approaches to be taken forward for empirical testing, taking account of the objectives of the research and the evidence gathered during phase 1. The successful contractor(s) will then carry out empirical testing of these approaches, allowing for a segmentation of DC savers, for example by stage of career, and any other relevant categorisation.

FEEDBACK SOUGHT

We are looking for feedback on a range of delivery approaches, including but not limited to:

SCOPE

• Are there any additional or alternative phases or activities that are required to meet the Purpose of the project?
• Are there relevant insights from other sectors or jurisdictions that could be adapted to improve how uncertainty and variability are communicated to DC savers?

RESEARCH METHODS

• What approaches and methods could be used, and what issues might we encounter, in each of the following:
• Defining suitable bodies of academic and professional literature to review, and upon which to draw.
• Developing the potential solutions for communicating DC pensions uncertainty and variability; working closely with the FRC team in doing so.
• Selecting among the above potential solutions for field based empirical testing with users.
• Conducting that testing with rigour and inclusiveness, using suitable techniques and population samples.

STRUCTURE

• What key milestones and dependencies would you envisage? What would be the best way(s) of involving the FRC team in review phases, and key decision-making?
• How could responsibilities and interfaces between different parts of the project be managed, especially if delivered by different contractors?

TIMETABLE

• The realistic overall duration of the project and indicative time needed for each of the three phases.
• The lead time required for participant recruitment, research approvals, data collection, analysis and reporting, and any seasonal or market factors that could affect delivery.

ADDITIONAL COMMENTS

• Are there any other insights that you could provide?

PRELIMINARY MARKET ENGAGEMENT PROCESS

The process comprises two parts (a) questionnaire for your completion and (b) A virtual market engagement session.

IMPORTANT :- You must register your interest to [email protected] (no later than 5.00pm 14/09/2026) to receive the questionnaire / further details.

CONDITIONS OF PARTICIPATION

The FRC welcomes participation from potential contractors with demonstrable experience, capacity and capability relevant to the proposed services. Contractors will be required to confirm their independence (in relation to the scope of this research) and declare any actual, potential or perceived conflicts of interest. Such matters may be taken into account as part of the procurement process, particularly where an entity tendering for this work is subject to direct or delegated regulation by the FRC.