Statement of Accounts 2020 / 21
Statement of Accounting Policies ( continued ) For the year ended 31 July 2021
Income recognition ( continued ) There are four main types of donations and endowments within reserves :
1 . Restricted donations – the donor has specified that the donation must be used for a particular objective . 2 . Unrestricted permanent endowments – the donor has specified that the fund is to be permanently invested to generate an income stream for the general benefit of the University . 3 . Restricted expendable endowments – the donor has specified a particular objective other than the purchase or construction of tangible assets , and the University has the power to use the capital . 4 . Restricted permanent endowments – the donor has specified that the fund is to be permanently invested to generate an income stream to be applied to a particular objective .
Capital grants
Capital grants are recognised in income when the University is entitled to the income subject to any performance related conditions being met .
7 . Accounting for retirement benefits
The two principal pension schemes for the University ’ s staff are the Universities Superannuation Scheme (“ USS ”) and the Keele Superannuation Scheme (“ KSS ”). The schemes are defined benefit schemes which are externally funded . Each fund is valued every three years by professionally qualified independent actuaries .
The USS is a multi-employer defined benefit scheme for which it is not possible to identify the assets and liabilities to Institution at members due to the mutual nature of the scheme and therefore this scheme is accounted for as a defined contribution retirement benefit scheme . A liability is recorded within provisions for any contractual commitment to fund past deficits within the USS scheme .
Defined Contribution Plan
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts . Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement in the periods during which services are rendered by employees .
Multi-employer schemes
Where the University is unable to identify its share of the underlying assets and liabilities in a multi-employer scheme on a reasonable and consistent basis , it accounts as if the scheme were a defined contribution scheme . Where the University has entered into an agreement with such a multi-employer scheme that determines how the University will contribute to a deficit recovery plan , the University recognizes a liability for the contributions payable that arise from the agreement , to the extent that they relate to the deficit , and the resulting expense is recognised in expenditure .
Defined benefit schemes
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan . Under defined benefit plans , 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 net liability is recognised in the balance sheet in respect of each scheme and is the present value of the defined benefit obligation at the reporting date less the fair value of the plan assets at the reporting date .
The Group should recognise a liability for its obligations under defined benefit plans 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 plan 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 plan .
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income . These amounts together with the return on plan assets , less amounts included in net interest , are disclosed as actuarial gains and losses . The cost of the defined benefit plan , recognised in expenditure as staff costs , except where included in the cost of an asset , comprises the increase in pension benefit liability arising from employee service during the period and the cost of plan introductions , benefit changes , curtailments , and settlements . The net interest cost is calculated by applying the discount rate to the net liability . This cost is recognised in expenditure as a finance cost .
Further detail is provided on the specific pension schemes in note 32 to the accounts .
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