On 30 March, the government published the outcome (This link opens in a new window) of the discount rate methodology consultation. Consultees were asked to respond to questions on whether the existing mechanism should be retained or whether there should be a return to the previous methodology.

The government has decided to maintain the existing mechanism, whereby the discount rate will be linked to the long-term outlook for Gross Domestic Product, as it best meets the policy criteria for the discount rate – around providing a fair reflection of costs, recognising the risk to future taxpayers and stability.

The outcome will have an impact on the outcome of the scheme valuation that’s currently taking place, although the full impact and result of that will not be known until later in the summer.

In the meantime, HM Treasury have agreed to fund any increase in costs this creates in 2024-25 for centrally funded employers, including maintained schools, early years and FE establishments. HM Treasury have also agreed to continue discussions with the Department for Education on the funding position for HE employers.

Further detailed information can be found in the report on their website. (This link opens in a new window)