Changes to Actuarial Factors Used in Pension Calculations

On 30 March 2023, a written ministerial statement was made by the Chief Secretary to the Treasury.

The superannuation contributions adjusted for past experience (SCAPE) discount rate was reduced from CPI plus 2.4% to CPI plus 1.7%.  In the LGPS, the SCAPE rate is used in determining the actuarial factors used in pension calculations.

It is understood that the Department for Levelling Up, Housing and Communities (DLUHC) will be issuing revised actuarial factors for the LGPS in phases over a four-month period from April 2023.

The impact for the LGPS, is that some pension calculations will need to be suspended until the new factors are received.  These include:

• certain non-club, interfund and intrafund transfers
• certain non-club cash transfer sums
• all cash equivalent values (CEV) for divorce

In addition, Essex Pension Fund will:

• communicate the impending changes to actuarial factors to members, when providing retirement quotations with an effective date on or after 1 April 2023.
• notify members who have been provided with a CEV for divorce purposes since 1 October 2023 but a pension sharing order has not yet been made. This will allow for the change in the CEV to be taken account in the financial settlement.

If you have any questions, please contact the Fund by email on: pensions.technical@essex.gov.uk.