Financial Statements 2017/18
29. Pension Schemes
The University’s employees belong to two principal pension schemes, the Teachers’ Pension Scheme (TPS) for most academic staff and the Local Government Pension Scheme (LGPS) for all other staff. The schemes are defined benefit schemes providing benefits based on career average design. Benefits accrued prior to the schemes transitions to career average arrangements are protected providing benefits based on a final pensionable salary. The University’s pension service costs and contributions for the year in respect of these two schemes was £18,680k (2017: £14,648k).
Teachers’ Pension Scheme
The Teachers’ Pension Scheme (TPS) is operated by the Department for Education (DfE) and is governed by statutory regulations. Under the definitions set out in Financial Reporting Standard 102 (FRS102), the TPS is a multi-employer pension scheme. As the TPS is underwritten by central government and the University has no future obligation to make contributions to the scheme, this is effectively a defined contribution scheme in so far as it affects the University. As a result, contributions to this scheme are accounted for as if the scheme was a defined contribution scheme.
The TPS is a statutory, contributory, unfunded, defined benefit scheme. The regulations under which the TPS operates are the Teachers’ Pensions Regulations 1997, as amended. Contributions are credited to the Exchequer on a “pay as you go” basis under arrangements governed by the Superannuation Act 1972. A notional asset value is ascribed to the Scheme for the purposes of determining contribution rates.
The University has set out below the information available on the Scheme and the implications for the University in terms of the anticipated contribution rates.
The employer’s contribution rates set by the schemes actuary and approved by the DfE for the University’s academic staff were from 1 September 2015 (to 31 March 2019) 16.48% of pensionable salaries.
The total contribution made by the University for the year ended 31 July 2018 was £10,722k (2017: £10,495k) of which employers contributions totalled £6,609k (2017: £6,493k) and employees contributions totalled £4,113k (2017: £4,002k).
The scheme is subject to a full actuarial valuation every four years with the most recent funding valuation carried out as at 31 March 2012. The funding valuation report was published by the DfE on 9 June 2014. The key highlights from this report are as follows:
Funding position
Aggregate value of liabilities Aggregate value of assets Total (shortfall)
At 31 March 2012 £bn
191.5 176.6 (14.9)
The full actuarial valuation of the scheme as at 31 March 2016 has not been published although the DfE has confirmed that the employer contribution rate that will apply from 1 April 2019 will increase although would be implemented from 1 September 2019 to assist employers with budgeting. The exact level that will apply from April 2019 is expected to be confirmed at the end of 2018 when the Government Actuarial Department finalises the scheme valuations and employers and members are formally notified on their contribution rates.
More information about the TPS can be obtained from
www.teacherspensions.co.uk
88
Middlesex University
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