Government Actuaries Back New SCAPE Discount Rate Method
The Government Actuary’s Department (GAD) has thrown its weight behind a fresh approach to the SCAPE discount rate, a key figure in setting public service pension contributions.
What is SCAPE?
SCAPE stands for Superannuation Contributions Adjusted for Past Experience. It’s the formula used to calculate employer contribution rates when valuing unfunded public service pension schemes.
Public Consultation Sparks Debate on Methodology
The government opened the floor to public opinion on two possible methodologies for the SCAPE discount rate. They set three strict goals for the new system:
- Fair reflection of pension costs
- Inclusion of future risks to government income
- Stability in the long term
Final Decision: GDP Growth-Based Rate Wins Out
After reviewing feedback, the government chose a method based on long-term GDP growth expectations as the best fit. The SCAPE discount rate was updated to 1.7% above the Consumer Prices Index (CPI) inflation rate.
This new approach aims to balance cost reality, risk foresight, and stability for public sector pensions moving forward.
