Merseyside Integrated Transport Authority Statement Of Responsibilities For The Statement Of Accounts


Merseyside Integrated Transport Authority



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Merseyside Integrated Transport Authority


Notes To The Financial Statements (Cont'd)

(c) Assets and Liabilities in relation to retirement benefits


Reconciliation of present value of the scheme’s liabilities.





MITA




Group




Re-stated







Re-stated







2007/08

2008/09




2007/08

2008/09






















£000

£000




£000

£000



















Benefit Obligations at 1 April

55,975

61,280




241,406

251,553

Current Service Cost

1,319

1,413




3,298

3,579

Interest on Pension Liabilities

3,012

3,725




12,824

15,119

Member Contributions

480

517




1,256

1,369

Past Service Costs


469

-




1,169

-

Actuarial gains/losses

2,233

(12,491)




4,008

(46,012)

Curtailments

-

-




-

-

Settlements

-

-




-

-

Benefits/Transfers Paid

(2,208)

(2,357)




(12,408)

(12,364)

Business Contributions

-

-




-

-

Benefit Obligations at 31 March 2009

61,280


52,087




251,553

213,244

(d) Reconciliation of Fair Value of the Scheme’s Assets







MITA




Group




Re-stated







Re-stated







2007/08

2008/09




2007/08

2008/09






















£000

£000




£000

£000




















Fair Value of plan assets at 1 April 2009

51,181

49,645




202,743

193,804

Expected return on plan assets

3,302

3,238




12,974

12,549

Actuarial gains/losses

(4,280))

(12,071)




(16,431)

(46,780)

Business Combinations

-

-




-

-

Settlements

-

-


-

-

Employer Contributions

1,170

1,244




5,670

6,350

Member Contributions

480

517




1,256

1,369

Benefits/Transfers Paid

(2,208)

(2,357)




(12,408)

(12,857)

Fair Value of plan assets at 31 March 2009

49,645

40,216




193,804

154,435

The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields at the Balance Sheet date. Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets.

The actual return on scheme assets in the year was £8,833k (£763k for re-stated 2007/08).
(e) Scheme History





MITA













Re-stated







2004/05*

2005/06*

2006/07*

2007/08

2008/09






















£000

£000




£000

£000

















Present value of liabilities

(48,200)

(55,824)

(55,975)

(61,280)

(52,087)

Fair Value of assets

39,646

48,851

51,284

49,645

40,216

Surplus/deficit in the Scheme

(8,554)

(6,973)

(4,691)

(11,635)

(11,871)






Group












Re-stated








2004/05*

2005/06*

2006/07*

2007/08

2008/09






















£000

£000




£000

£000



















Present value of liabilities

(225,172)

(246,649)

(241,406)

(251,553)

(213,244)

Fair Value of assets

166,680


197,733

203,150

193,804

154,435

Surplus/deficit in the Scheme

(58,492)

(48,916)

(38,256)

(57,749)

(58,809)

Merseyside Integrated Transport Authority
Notes To The Financial Statements (Cont'd)

* The Authority elected not to re-state Fair Value of scheme assets, for the years 2004/05 to 2006/07, as permitted by FRS17 (as revised). The statutory arrangements for funding the above deficits mean that the financial position of the Authority remains healthy (ie, the deficit on the Merseyside Pension Scheme will be made good by increased contributions over the remaining working life of employees as assessed by the Scheme Actuary).


(f) Pension Costs 2009/10
The total contributions expected to be made to the Merseyside Pension Scheme by the Authority in the year to 31 March 2010 is £919k.
Basis for estimating assets and liabilities

Liabilities have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. MITA pension liabilities have been assessed by Mercer Ltd, an independent firm of actuaries, estimates for the Merseyside Pension Fund being based on the latest full valuation of the scheme as at 1 April 2008.

The principal assumptions used by the actuary have been:-
Expected rate of return on assets in the Scheme:





MITA

Group




Expected Rate of Return on Assets

Split of Assets between Investment Categories

Expected Rate of Return on Assets

Split of Assets between Investment Categories

2007/08













Equity investments

7.5%

57.5%

7.5%

57.5%

Government Bonds

4.6%

16.1%

4.6%

16.1%

Other Bonds


6.1%

5.9%

6.1%

5.9%

Property

6.5%

8.7%

6.5%

8.7%

Cash/Liquidity

5.25%

4.5%

5.25%

4.5%

Other

7.5%

7.3%

7.5%

7.3%







100.0%




100.0%
















2008/09













Equity investments

7.5%

53.6%

7.5%

53.6%

Government Bonds

4.0%

17.7%

4.0%

17.7%

Other Bonds

6.0%

4.8%

6.0%

4.8%

Property

6.5%

9.3%

6.5%

9.3%

Cash/Liquidity

0.5%

4.2%

0.5%

4.2%

Other

7.5%


10.4%

7.5%

10.4%







100.0%




100.0%



Merseyside Integrated Transport Authority
Notes To The Financial Statements (Cont'd)





MITA

Group




2007/08

2008/09

2007/08

2008/09

Mortality Assumptions:













Longevity at 65 for current pensioners











Men (years)


20.3

20.3

20.3

20.3

Women (years)

23.1

23.2

23.1

23.2

Longevity at 65 for future pensioners













Men (years)

21.3

21.3

21.3

21.3

Women (years)

24.0

24.1

24.0

24.1

Rate of Inflation

3.6%

3.3%

3.6%


3.3%

Rate of Increase in Salaries

4.85%

4.55%

4.85%

4.55%

Rate of Increase in Pensions

3.6%

3.3%

3.6%

3.3%

Rate for discounting scheme/liabilities

6.1%

7.1%

6.1%

7.1%

Take-up of option to convert annual pension into retirement lump sum

50% take maximum cash, 50% take 3/80ths cash.

(g) History of experience gains and losses














Re-stated




MITA

2004/05

2005/06

2006/07

2007/08

2008/09




£000

%

£000

%

£000

%

£000

%

£000

%

Analysis of Actuarial gains/losses over 5 years





























Differences between the expected and actual return on assets


1723

4.3

6453

13.2

(15)

0.0

(4280)

(8.6)

12071

(30.0)

Differences between actuarial assumptions about liabilities and actual experience

264

0.5

(1159)

(2.1)

-

-

-

-

-

-

Changes in demographic and financial assumptions used to estimate scheme liabilities

(7397)

(15.3)

(3988)

(7.1)

2560

4.6


(2233)

(3.6)

(12491)

(24.0)

Total

(5410)



1306




2545




(6513)




(420)




Discount Rate




5.4%




4.9%




5.4%




6.1%




7.1%














Re-stated




Group

2004/05

2005/06

2006/07

2007/08

2008/09




£000

%

£000

%

£000

%

£000

%

£000

%

Analysis of Actuarial gains/losses over 5 years





























Differences between the expected and actual return on assets


8445

5.1

26573

13.4

(61)

0.0

(16431)

(8.5)

46780

(30.3)

Differences between actuarial assumptions about liabilities and actual experience

(8835)

(3.9)

(2624)

(1.1)

-

-

-

-

-

-

Changes in demographic and financial assumptions used to estimate scheme liabilities

(30354)

(13.5)

(15781)

(6.3)

9790

4.1

(4008)


(1.6)

(46012)

(21.6)

Total

(30744)



8168




9729




(20439)




768




Discount Rate




5.4%




4.9%




5.4%




6.1%




7.1%

(iv) Deferred taxation has been ignored.


(v) Revenue account items and movement in reserves items are now required under FRS 17 for 2008/09 and subsequent years.
(vi) Compensatory added years benefits which are recharged to the Authority have been included in the liabilities for the purpose of FRS 17 calculations.

(vii) The actuary has carried out average age of the membership investigations as part of the 2008 actuarial valuation. Assumptions made in these figures are derived from the 2008 valuation exercise.

Merseyside Integrated Transport Authority
Notes To The Financial Statements (Cont'd)

(viii) The Accounts and Audit Regulations 2006 (SI 2006 No 564) allows the MPTEs FRS17 costs to be neutralised in the same way as FRS17 costs are neutralised for Local Authorities.


(ix) The original figures for pension assets, prepared under FRS 17 guidelines, were based on 9 months’ actual performance of the Pension Fund, plus an estimate for the final quarter, representing a combined performance of -3.0%. These accounting statements include the Pension Fund’s re-stated March 2008 figure to reflect the actual Fund balance as at March 2008 to compare to the 2008/09 figures that were so prepared on the same basis using actuals as at 31 March 2009.




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