Financial Statements 2019/2020
MIDDLESEX UNIVERSITY NOTES TO THE ACCOUNTS (continued)
Year Ended 31 July 2020 Change in demographic assumptions at 31 July 2020
The principal demographic assumption is the longevity assumption (i.e. member life expectancy). For sensitivity purposes the actuary estimates that a one year increase in life expectancy would approximately increase the University defined benefit obligation between 3 to 5%. In practice the actual cost of one year increase in life expectancy will depend on the structure of the revised assumption (i.e. if improvements to member survival rates predominantly apply at younger or older age groups).
Funding deficit plan
The underlying assumptions in relation to the estimate of the present value of the obligation in respect of the funding deficit plan for the LGPS pension scheme such as the salary inflation over the period of the funding deficit plan and the discount rate to be used.
b. Pension enhancements on termination (see note 22)
The critical underlying assumptions in relation to the estimate of the pension enhancement obligation such as life expectancy and the discount rate on corporate bonds. Variations in these assumptions have the ability to significantly influence the value of the provision for unfunded liabilities recorded and annual expense.
c. Tangible fixed assets depreciation (see note 14)
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset, and projected disposal values.
d. Trade and tuition fee debtors (see note 18)
The Group has a material level of exposure to collection of trade and tuition fee receivables. The estimate for receivables relates to the recoverability of the balances outstanding at the year end. Provisions in respect of these balances are calculated from a review performed on an accounts receivable aging method to determine whether debt is recoverable by aged group and a predetermined rate. Analysis of actual recovery compared with provisioning levels have not, to date, resulted in material variances.
Middlesex University
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