Cost Control Mechanism and Discount Rate Methodology Consultations Launched
HM Treasury published two public consultations on 24 June 2021, seeking views on proposals to make changes to the cost control mechanism in public service pension schemes, and secondly on the appropriate methodology for setting the discount rate used in scheme valuations.
The consultations will run for eight weeks and are available to view at the links below:
Cost control mechanism
The Government Actuary has carried out a review of the cost control mechanism in the public service pension schemes. His final report sets out his assessment of the current mechanism and recommendations on possible changes. The UK Government has considered the recommendations and is now consulting to seek views on three changes to the mechanism, all of which are recommendations by the Government Actuary.
Discount rate methodology
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.