Middlesex University
Financial Statements 2016/17
29. Pension Schemes (continued) Local Government Pension Scheme
The Local Government Pension Scheme (LGPS) is a funded defined benefit scheme, with assets held in separate trustee administered funds. It is administered locally by the London Borough of Barnet and is a multi-employer scheme. The total contribution made by the University for the year ended 31 July 2017 was £8,908k (2016: £8,753k) of which employers contributions totalled £6,869k (2016: £6,755k) and employees contributions totalled £2,039k (2016: £1,998k).
For the period to 31 July 2017 (date extended from period to 31 March 2017 under an arrangement with the scheme administrators) the overall employer contribution rate was 26.6%. From 2014 the University entered into a funding deficit recovery plan with the scheme administrators. This treatment required the cost of providing pension benefits to be broken down into two distinct elements: current scheme funding of 11.3% of pensionable salaries from 1st April 2014 to 31 July 2017 (date extended from 31 March 2017) and a deficit reduction contribution. The deficit reduction contribution was £3,638k in the period to 31 July 2017 (date extended from 31 March 2017). The indicative rate from 1 August 2017 (date extended from 1 April 2017) as disclosed in the full actuarial valuation of the fund for the period to 31 March 2016 is 18.4% of pensionable salaries for current scheme funding and a deficit reduction contribution of £2,698k. For the period from 1 August 2017 to 31 July 2020 the overall employer contribution rate is 27.7%. The total employer contributions expected to be paid into the scheme during the year ended 31 July 2018 is £6,997k.
For the period to 31 March 2016 the scheme was contracted out of the State additional Pension (S2P) of pension provision. Contracting out on a defined benefit basis ended in April 2016, when the government’s state pension reforms came into force.
Financial Reporting Standard 102 (FRS102)
The following information is based upon a full actuarial valuation of the Fund at 31 March 2016 updated to 31 July 2017 by a qualified independent actuary, using financial assumptions that comply with FRS102. Basis for estimating assets and liabilities
The liabilities have been assessed using the projected unit method, an estimate of the pensions that will be payable in future years are dependent on the following major assumptions: Longevity assumptions: The post retirement mortality tables adopted are the S1PA tables.
Average future life expectancies at age 65 (years) are: Current pensioners (retiring today)
Males Females Future pensioners (retiring in 20 years)*
* Figures assume members aged 45 as at the last formal valuation date (31 March 2016). Financial assumptions:
Retail prices inflation (RPI increases) Consumer prices inflation (CPI increases) Rate of increase in salaries Rate of increase for pensions Discount rate for liabilities
Males Females
At 31 July 2017 21.9
24.3
23.9 26.5
At 31 July 2017 3.5%
2.5% 2.8% 2.5% 2.7%
At 31 July 2016 22.1
24.4
24.2 26.8
At 31 July 2016 2.9%
1.9% 3.9% 1.9% 2.4%
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