News story

SCAPE rate methodology

GAD supported the government as it considered the methodology surrounding the SCAPE discount rate. A public consultation sought views on methodologies for the discount rate.

From:
Government Actuary's Department
Published
5 April 2023
Three young business people sitting at a desk. They are smiling and pointing to a laptop.

Advisers at the Government Actuary’s Department (GAD) have supported the government as it considered the methodology surrounding the SCAPE discount rate.

SCAPE stands for Superannuation Contributions Adjusted for Past Experience. It is the process for setting employer contribution rates at valuations of unfunded public service pension schemes.

Methodologies

A public consultation sought views on 2 possible methodologies for the SCAPE discount rate and proposed 3 objectives for making the decision:

  • fair reflection of costs
  • reflect future risks to government income
  • stability
Hands pointing to notes stuck onto a white board.

Consultation result

The government’s conclusion was that a methodology based on long-term future GDP growth expectations best met the balance of objectives.

Following the consultation response, the SCAPE discount rate changed to 1.7% above the annual rate of the Consumer Prices Index of inflation.

Read more about our role in this project in this GAD technical bulletin.

Published 5 April 2023