the arrangements for the TPS mean that liabilities for these benefits cannot ordinarily be identified specifically to the University. The Scheme is therefore accounted for as if it was a defined contribution scheme and no liability for future payments of benefits is recognised in the statement of financial position.
Defined Contribution Scheme
A defined contribution scheme is a pension scheme under which the employer pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.
The University’s obligations for contributions to the TPS whilst being a defined benefit scheme is treated as a defined contribution scheme as explained above and are recognised as an expense in the consolidated statement of comprehensive income in the periods during which services are rendered by employee members.
MU Services Limited’s obligations for contributions to the Middlesex University Defined Contribution Pension Scheme is a defined contribution scheme as explained above and are recognised as an expense in the consolidated statement of comprehensive income in the periods during which services are rendered by employee members.
Defined Benefit Scheme
Defined benefit schemes are pension schemes other than defined contribution schemes. Under defined benefit schemes, the University’s obligation is to provide the agreed benefits to current and former employees, and actuarial risk (that benefits will cost more or less than expected) and investment risk (that returns on assets set aside to fund the benefits will differ from expectations) are borne, in substance, by the University. The Group recognises a liability for its obligations under the LGPS net of plan assets. This net defined benefit liability is measured as the estimated amount of benefit that employees have earned in return for their service in the current and prior periods, discounted to determine its present value, less the fair value (at bid price) of Scheme assets. The calculation is performed by a qualified actuary using the projected unit credit method. Where the calculation results in a net asset, recognition of the asset is limited to the extent to which the University is able to recover the surplus either through reduced contributions in the future or through refunds from the Scheme.
Further details of the pension Schemes are given in note 31.
Other pension benefits
The University continues to make a small and diminishing number of supplementary payments to former staff and dependants of those staff, who took early retirement during the 1990s. The liabilities of the pension enhancements on termination can be estimated under FRS 102 and are included in the Financial Statements at note 22.
H Employment Benefits
Short term employment benefits include benefits payable during employment such as salaries and compensated absences (e.g. paid annual leave) and are recognised as an expense in the year in which the employees render service to the University.
Short term employee benefits are those due to be settled within 12 months of the year-end date.
Any unused benefits are accrued and measured as the additional amount the University expects to pay as a result of the unused entitlement.
An accrual is made for the cost of annual leave entitlements earned by employees but not taken before the year end date which employees can carry forward into the next financial year.
I Leases and service concession arrangements Leases
Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property or equipment from the lessor to the lessee. All other leases are classified as operating leases.
Arrangements that do not have the legal status of a lease but convey a right to use an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets.
The University as Lessee Finance leases
Leases in which the University assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Leased assets acquired by way of finance lease and the corresponding lease liabilities are initially recognised at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance
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Financial Statements 2020/21
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