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Government confirms outcome on the ‘SCAPE discount rate methodology’ for public sector pensions

The Treasury has released its response to the consultation on the 'SCAPE discount rate methodology', which is used for the valuations of the public service pension schemes that are currently underway, including for the Teachers' Pension Scheme (TPS). The SCAPE discount rate is a key determinant of pension scheme contributions as it converts future pension promises into 'present-day' terms.

Following the consultation, the government has decided to retain the current methodology. 


The SCAPE discount rate methodology is used alongside other such as earnings changes, changes to life expectancy and demographic assumptions, in pension valuations every four years. These set the new employee and employer contribution rates for public sector pensions. 

The 2020 pension valuations are underway, to determine new employer contribution rates which the government aims to implement from April 2024. 

The government is aware that the updated SCAPE discount rate will generally lead to higher employer contribution rates for most unfunded public service pension schemes resulting from the 2020 valuations. In recognition of this, the government has committed to providing funding for increases in employer contribution rates resulting from the 2020 valuations until the next spending review, for employers whose employment costs are centrally funded through departmental expenditure. For devolved administrations, the Barnett formula will apply in the usual way.

NAHT will continue to keep members updated on this, in particular the extent of the increase to the employer contribution rate when this finalised, and the approach being taken to the funding of any increase. In the meantime, we remain engaged in conversations with Department for Education through our presence on the TPS scheme advisory board.  

First published 17 April 2023