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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.
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.