The 2020 valuation consultations could be game-changers
The Government’s proposals relating to future valuations of teachers’ pension schemes could be game-changers, following the recent publication of two consultations.
The outcome of these consultations could have a big impact on the results of the 2020 public sector pension scheme valuations, including the Teachers’ Pension Scheme (‘TPS’) and Scottish Teachers’ Pension Schemes (collectively referred to as ‘STPS’).
Consultation 1: the Cost Control Mechanism
The first consultation looks at proposals for reforming the Cost Control Mechanism. This mechanism was introduced following a review of public sector pension provision carried out in 2011, and its impact was first felt following the 2016 round of valuations.
Consultation 2: the Discount rate
The assumption that can have the largest impact on the cost of pension benefits is the SCAPE discount rate. In 2016, this was set by reference to long-term projections for UK GDP growth, but this is the subject of the second consultation now underway.
In our briefing note we consider in detail the consultation proposals and the impact these may have on the 2020 valuations.
Teachers’ Pension Scheme: 2020 valuation consultations could be game-changers
These consultations will form a key part of the roadmap towards regaining more certainty in the cost of pensions for independent schools, and across the public sector.
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