Actuarial valuations of public service pensions schemes

The first announcement stated that 2016 valuations will complete while a second announcement set out how the cost control mechanism will be reformed starting from the forthcoming 2020 valuations.

For 2016 valuations the cost control element of these valuations had been paused due to uncertainty arising from the McCloud/Sargeant litigation but as that uncertainty recedes those valuations can now complete.

On 7 October, the government published Amending Directions that allow completion of the 2016 public service pension scheme valuations. This legislation sets out how schemes must allow for the impact of the McCloud/Sargeant litigation in the cost control element of those valuations.

As part of this process, HMT consulted the Government Actuary on these changes and completed this statutory consultation in October 2021.

For the 2020 valuations cost control mechanism reform, the government announced it is to go ahead with the reforms of the cost control mechanism it proposed in its consultation earlier this year.

In particular those reforms related to moving to a “reformed scheme only” design, widening the corridor from 2 per cent to 3 per cent of pensionable pay and introducing an economic check.

These reforms will be implemented ahead of the completion of the 2020 valuations and follow the Government Actuary’s recommendations in its review of the mechanism earlier this year.