Recommendation 10

While the cost control mechanism was only used for the first time in 2016, HM Treasury is concerned that it is not sufficiently protecting the taxpayer and members. The provisional results of the 2016 valuations show that costs had fallen across all schemes, and therefore members could expect an increase in their benefits or a reduction in the amount they contribute.20 However, HM Treasury paused the implementation of those changes while it formed its response to the McCloud judgment. HM Treasury has asked the Government Actuary’s Department (GAD) to review the mechanism to ensure it meets government’s objectives. When asked for current reflections from the review, GAD told us that the mechanism is likely to be triggered “very frequently”, rather than only as a result of ‘extraordinary, unpredictable events’ as HM Treasury intended. In his view, this undermines the stability of the mechanism and appears not to be keeping taxpayer costs under control.21