report_financial_statements_17_18_final

Barking & Dagenham College
Notes to the Accounts (continued)

23 Defined benefit obligations (continued)

FRS 102 (28)
Under the definitions set out in FRS 102 (28.11), the TPS is a multi-employer pension scheme. The College is
unable to identify its share of the underlying assets and liabilities of the scheme.

Accordingly, the College has taken advantage of the exemption in FRS 102 and has accounted for its
contributions to the scheme as if it were a defined-contribution plan. The College has set out above
the information available on the plan and the implications for the College in terms of the anticipated
contribution rates.

Local Government Pension Scheme
The LGPS is a funded defined-benefit plan, with the assets held in separate funds administered by London
Borough of Barking & Dagenham Local Authority . The total contribution made for the year ended 31 July
2017 was £1,669m, of which employer’s contributions totalled £1,334m and employees’ contributions
totalled £0.335m. The agreed contribution rates for future years are 17.3 % for employers and range from
5.5% to 7.5% cent for employees, depending on salary.

Principal Actuarial Assumptions
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

At 31 July At 31 July

2018 2017

Rate of increase in salaries 2.10% 3.00%

Future pensions increases 2.10% 2.50%

Discount rate for scheme liabilities 2.90% 2.70%

Inflation assumption (CPI) 1.25% 1.25%

Commutation of pensions to lump sums 50% 50%

The current mortality assumptions include sufficient allowance for future improvements in mortality rates.
The assumed life expectations on retirement age 65 are:

At 31 July At 31 July

2018 2017

years years

Retiring today

Males 22.00 22.00

Females 24.00 24.70

Retiring in 20 years 24.00 24.00
Males 26.40 26.40
Females

Sensitivity analysis At 31 July At 31 July 51
2018 2017
Discount rate -0.5% £'000 £'000
Salary increase 0.5%
Salary decrease -0.5% (4,320) (4,569)
CPI rate +0.5% 485 864

(485) (864)
3,815 564

Barking & Dagenham College
Notes to the Accounts (continued)

23 Defined benefit obligations (continued)

Local Government Pension Scheme (Continued)
The College's share of the assets in the plan and the expected rates of return were:

Fair Value at Restated Fair
31 July 2018 Value at 31
July 2017

£’000 £’000
21,928
Equities 75.00% 76.00% 19,483
Bonds 17.00% 4,970
Property 1,754 18.00% 4,614
Cash 6.00%
2.00% 585 6.00% 1,538

0.00% 0

Total market value of assets 29,237 25,636

Weighted average expected long term rate of 5.80% 5.80%
return

Actual return on plan assets 1,696 1,487

The amount included in the balance sheet in respect of the defined benefit pension plan is as follows:

Fair value of plan assets 2018 2017
Present value of plan liabilities £’000 £’000
Present value of unfunded liabilities 29,237 25,636
Net pensions (liability)/asset (Note 19) (38,075) (40,756)

(16) (17)
(8,854) (15,137)

Amounts recognised in the Statement of Comprehensive Income in respect of the plan are as follows:

Amounts included in staff costs 2018 2017
Current service cost £’000 £’000
Past service cost
Total 1,948 1,610
- -

1,948 1,610

Amounts included in investment income 1,.087 992
Net interest income 1,087 992

52

Amounts recognised in Other Comprehensive Income (1,806) (2,077)
40 (2,135)
Return on pension plan assets
Experience losses arising on defined benefit - (323)
obligations (1,678) (2,388)
Changes in demographic assumptions
Changes in assumptions underlying the (3,444) (6,923)
present value of plan liabilities

Amount recognised in Other Comprehensive Income

53

Barking & Dagenham College
Notes to the Accounts (continued)

23 Defined benefit obligations (continued)

Local Government Pension Scheme (Continued) 2018 2017 Restated 2017
Movement in net defined benefit (liability/asset during the year £’000 £’000 £’000
(8,854) (15,137)
Surplus/(deficit) in scheme at 1 August (15,137)
Movement in year: (1,948) (1,610)
Current service cost 1,371 (1,610) 1,334
Employer contributions - 1,334 -
Past service cost (255) - (366)
Net interest on the defined (liability)/asset 3,444 (366) 2,986
Actuarial gain or loss 6,925
Net defined benefit (liability)/asset at 31 July (6,242) (12,791)
(8,854)
2017
Asset and Liability Reconciliation 2018 2017 Restated £’000

Changes in the present value of defined benefit £’000 £’000 40,773
obligations 1,610
Defined benefit obligations at start of period 38,091 40,773 992
Current Service cost 1,948 1,610 336
Interest cost 1,087 992
Contributions by Scheme participants 362 336 (2,020)
Experience gains and losses on defined benefit 40
obligations (2,135) 1,437
Changes in financial assumptions (1,678) (772)
Estimated benefits paid (756) (2,388) (325)
Changes in demographic assumptions - (772)
Past Service cost - (323) -
Curtailments and settlements - - -
- 42,031

Defined benefit obligations at end of period 39,094 38,091

Fair value of plan assets at start of period 29,237 25,636 25,636
Interest on plan assets 832 626 626
Return on plan assets
Employer contributions 1,806 2,077 2,078
Contributions by Scheme participants 1,369 1,334 1,334
Estimated benefits paid
Fair value of plan assets at end of period 362 336 336
(756) (772) (772)
32,850 29,237 29,238

A prior year adjustment has been made for FRS102 commutations to given a fairer representation following
a review of assumptions.
54

Barking & Dagenham College
Notes to the Accounts (continued)
24 Related party transactions
Due to the nature of the College’s operations and the composition of the board of governors being
drawn from local public and private sector organisations, it is inevitable that transactions will take
place with organisations in which a member of the board of governors may have an interest. All
transactions involving such organisations are conducted at arm’s length and in accordance with the
College’s financial regulations and normal procurement procedures.
Broadway Theatre
During the year ending 31 July 2018 the College paid £100,000 (2017: £100,000) towards the cost
of meeting common services with other users. These are not repayable to the College and have been
charged as a cost in the College’s accounts.
Barking Learning Centre
During the year ending 31 July 2018 the College paid £149,325 (2017: £138,587) to Barking
Learning Centre as a contribution to operating costs. These are not repayable to the College and
have been charged as a cost in the College’s accounts.
25 Post Balance Sheet Event
As part of the college’s property strategy, a £10m refurbishment project will commence in 2018-19
to create a Centre for Advanced Technologies.

55

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56 www.bdc.ac.uk

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