Independent schools: Government announces change to TPS discount rate

One of the key drivers behind the actuarial calculation of employer’s contributions into the Teachers’ Pension Schemes is the discount rate for valuing the scheme's liabilities.

The lower that rate, the higher the liabilities - and therefore the higher each School’s contribution.

Following a Government consultation on the methodology behind the calculation, named SCAPE, it's now been reaffirmed as being based on the Office for Budget Responsibility’s forecast of long-term GDP growth.

Accordingly, the new SCAPE discount rate for the 2020 valuation is reducing by 0.7% p.a. from 2.4% to 1.7%.

This will have a significant effect on the output of the valuation, and the revised employer contributions applicable from April 2024.

At Punter Southall Aspire we'll support our Independent Schools clients on their planning around the changes, to help them react accordingly.

If you and/or your governing body would like to explore any of the above further, or want to discuss your school’s particular circumstances, just get in touch.