Consultation outcome

Public service pensions: Consultation on the discount rate methodology

• From: HM Treasury
• Published: 24 June 2021
• Last updated: 30 March 2023 — See all updates

This was published under the 2019 to 2022 Johnson Conservative government

This consultation has concluded

Read the full outcome

Public Service Pensions: Consultation on the discount rate methodology: Government response

PDF, 333 KB, 59 pages

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HMT to Government Actuary SCAPE methodology response letter

PDF, 174 KB, 3 pages

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HMT to Governement Actuary SCAPE methodology response letter - supplementary

PDF, 50.5 KB, 2 pages

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Government Actuary to HMT SCAPE methodology response letter

PDF, 1.51 MB, 10 pages

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Government Actuary to HMT SCAPE methodology response letter - supplementary

PDF, 259 KB, 4 pages

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Detail of outcome

The SCAPE discount rate methodology consultation asked respondents for views on the objectives for the discount rate, the advantages and disadvantages of different discount rate methodologies and their relative preferences. The government received responses from a broad range of respondents, including individuals, trade unions and other member representative bodies, employers and employer representative bodies, actuarial and pensions specialists, and pensions administrators.

Following consultation, the government has concluded that the current methodology based on expected long-term GDP growth best meets the balance of the objectives for the SCAPE discount rate. The government believes that this methodology will best provide intergenerational fairness by ensuring that pension promises are made in a way that is sustainable and affordable to future taxpayers, which will support the long-term stability of the public service pension system.

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Original consultation

Summary

This consultation seeks views on the methodology the Government uses to set the SCAPE discount rate.

This consultation ran from
9am on 24 June 2021 to 11:45pm on 19 August 2021

Consultation description

The SCAPE discount rate is a discount rate used in the valuation of unfunded public service pension schemes to set employer contribution rates. It expresses future pension promises that are being built up in present-day terms and is set by HM Treasury following a prescribed methodology. The current methodology for setting the SCAPE discount rate has been in place since 2011. This consultation seeks views on the objectives for the SCAPE discount rate and the most appropriate methodology for setting the SCAPE discount rate going forward.

The government launched a separate consultation on changes to the cost control mechanism on 24 June. Its response to that consultation was published on 4 October. The government will respond to its consultation on the discount rate methodology in due course.

Documents

Consultation on the discount rate methodology

PDF, 359 KB, 35 pages

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Published 24 June 2021
Last updated 30 March 2023 + show all updates

1. 30 March 2023

   Consultation response and letters between HMT and Government Actuary added

2. 24 June 2021

   First published.