Change to SCAPE Rate and Public Sector Pensions
The government confirmed on the 30th of March that the SCAPE (Superannuation Contributions Adjusted for Past Experience) discount rate is to change from 2.4% to 1.7%. The main purpose of the SCAPE rate is to assess employer contributions in the public sector schemes; however it is also a key assumption in the calculation of CETVs and for determining the proceeds of Pension Sharing Orders in the public sector.
This change will increase CETV values across the board and have an impact on the percentage PSOs required to achieve equal incomes. Where scheme member and spouse are of similar age and assumed to draw pension from the same age then the percentage PSO should not change to a material extent. However, where there is a more material age difference or where the parties are assumed to draw pensions from different ages the percentage Pension Sharing Order to achieve equal pension incomes based on the revised factors (once available) will differ from what would be assessed based on the factors applicable up to 30 March 2023.
I am aware that some public sector schemes have already suspended the provision of CETVs and are likely to defer the implementation of PSOs. Unfortunately, at this stage we do not have any idea of the timescale for the Government Actuary’s Department providing the revised factors.
You should review any cases where you have received a report where the Pension Sharing Order has not yet been implemented, we would be happy to provide more specific advice if so required.
We are reviewing cases in the pipeline at the moment and, if you have any cases with us that will be affected, we will be writing to you with the options available for proceeding at this stage.
If you have any questions regarding this please contact us.
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