Financial Statements 2018/19


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 transition 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 included at note 9 was £18,783k (2018: £18,680k).


McCloud Judgement


In December 2018 the Court of Appeal passed the McCloud judgement which relates to age discrimination in relation to judges and firefighters pensions. Although the case only relates directly to these two schemes it is anticipated that the principles of the outcome could be accepted as applying to all public service defined benefit pension schemes.


Whilst there is uncertainty of how this judgement may affect Local Government Pension Scheme (LGPS) members’ past or future service benefits it has been possible to approximate the cost within the LGPS falling due to the University.


As at 31 July 2019 the estimated funding liability calculated by a qualified independent actuary, using financial assumptions in accordance with the requirements of FRS102 and included within the Past Service Costs figure on Page 100 is £152k.


For the University’s other defined benefit scheme, the Teachers’ Pension Scheme (TPS), the McCloud judgement will only be an impact to the extent the change in benefits increases cash financing through the employer contribution rates set for the scheme.


Guaranteed Minimum Pensions (GMP)


In October 2018, a High Court ruling found Guaranteed Minimum Pensions (GMP) must be equalised between men and women, and that past benefit underpayments must be corrected. Employers such as the University, with defined benefit pension schemes and contracted out of the State additional Pension (S2P) from 17 May 1990 to 5 April 1997 are covered by the ruling, and will be impacted by increased defined benefit pension obligations.


The Government consulted on a solution to fund the cost of GMP with the outcome issued in January 2018. A further consultation on the methodology and legislation required to implement the preferred option is awaited and expected to be implemented from 6 April 2021.


It has been possible to approximate the equalisation cost of the GMP funding liability within the Local Government Pension Scheme (LGPS) falling due to the University. As at 31 July 2019 the estimated funding liability calculated by a qualified independent actuary, using financial assumptions in accordance with the requirements of FRS102 and included within the Past Service Costs figure on Page 100 is £670k.


For the University’s other defined benefit scheme, the Teachers’ Pension Scheme (TPS), GMP will only be an impact to the extent the change in benefits increases cash financing through the employer contribution rates set for the scheme.


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 pension benefits are 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 government 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.


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Middlesex University


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