LV= has expressed concerns over the Financial Services Authority's (FSA's) proposed changes to projection rates.
The watchdog wants to cut pension protection rates from 7% to 5% to give consumers more realistic expectations of retirement income.
However, Ray Chinn, LV= head of pensions, said the proposed new wording and guideline rates "will not actually result in a better outcome for customers".
He said the use of the term "accurate rates" would give false reassurances and suggested using the term "realistic rates", as it was "important a provider uses a rate that they believe reflects the true investment potential of a product at that point in time".
"Similarly it is crucial that clients are made aware of the investment risks posed and are clear that projection rates are not a guaranteed rate of return," he added.
Chinn said there was a risk some providers could switch to using the projection rates as a default.
"It is important that the regulator enforces this requirement and makes it clear that providers cannot use unrealistic rates with impunity," he said.
Chinn added clients would benefit from a "simpler" regime, "with a consistent, industry standard, fixed intermediate rate per asset class which providers can easily use to produce an overall single blended rate reflecting the portfolio of assets".
He said: "This would stop ‘growth rate arbitrage' across providers and avoid the real risk of advisers falsely using projections driven by different growth assumptions to compare providers' charges."
Chinn said he was also concerned that by setting the rider rates at 3% either side of the intermediate rate, it may not be clear to consumers what the potential return might be.
Aegon has also expressed reservations about the proposed changes. It said 'pessimistic' projection rates could undermine overall savings and added them watchdog's proposals were based on ‘arbitrary' investment assumptions.
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