Rnib group annual report and accounts 2010/11


Analysis of net assets between funds

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21. Analysis of net assets between funds




Group fund balances at 31 March 2011 are represented by:

Unrestricted funds

£’000

Restricted

funds

£'000

Endowment funds

£’000

Total

funds

£’000

Tangible fixed assets

65,188

15,039

-

80,227

Investments

26,719

3,027

5,526

35,272

Net current assets

942

10,428

-

11,370

Long-term liabilities


(21,136)

(371)

-

(21,507)

Defined Benefit Pension Scheme asset (liability)

1,723

(2,314)

-

(591)

Total net assets

73,436

25,809

5,526

104,771




Charity fund balances at 31 March 2011 are represented by:

Unrestricted funds

£’000

Restricted

funds

£'000

Endowment funds

£’000

Total

funds

£’000


Tangible fixed assets

65,188

-

-

65,188

Investments

26,724

23

5,494

32,241

Net current assets

937

4,904

-

5,841

Long-term liabilities

(21,136)

-

-

(21,136)

Defined Benefit Pension Scheme asset

1,723

-

-

1,723

Total net assets

73,436


4,927

5,494

83,857

22. Pension costs

The RNIB Group pension arrangements comprise those of RNIB and the associated charities, Action and CVV.

A summary of the movement in pension assets and liabilities for the Group's defined benefit pension funds is shown below:

a. Summary of scheme costs and balances

Amounts charged to SOFA

£'000

Actuarial gains
£'000

Defined Benefit Pension Scheme asset (liability)

£'000

RNIB Charity

3,008

9,122

1,723

Action schemes one and three

(89)

1,114

(1,558)

CVV

(130)

76

(756)


Total defined benefit schemes

2,789

10,312

(591)


RNIB

The RNIB Retirement Benefits Pension Scheme (RBPS) is partly defined benefit and partly defined contribution. Members joining before 1 April 2005 are wholly defined benefit, with those members joining after, having a hybrid of defined benefit and defined contribution. The assets of the Scheme are held in a separate fund, under control of its trustees, to which RNIB has no access. A salary sacrifice arrangement was introduced 1 July 2010 whereby the member's salary is reduced by the amount of the member contribution and in return the employer makes an equivalent contribution to the Scheme.


An actuarial valuation was carried out at 31 March 2009 by Actuaries "Aon Hewitt", using the projected unit method. The valuation disclosed that the market value of the Scheme's assets (excluding Voluntary Contributions) at that date was £93.3 million, and that there was a deficit (calculated as the excess of the market value of the Scheme's assets to the value of its past service ongoing liabilities, with allowance for future pay increases) of £28.6 million. Contributions by RNIB remain at 12 per cent of pensionable salaries. In addition RNIB and Action share the administrative costs of the Scheme. The pension scheme trustees have considered whether the measure used for inflation linked increases should be based on CPI rather than RPI. Given the scheme rules, it has been decided to continue to use RPI.

Following the merger with NLB, RNIB also offers the Pensions Trust's Growth Plan. The Growth Plan is a multi employer pension plan under which contributions are invested in personal funds which have a capital guarantee and convert to a pension on retirement. No contributions are currently required into the Plan, but the Pensions Trust has advised that in the event of a withdrawal from the Plan, or in the event of the Pensions Trust being wound up, RNIB would have liability to pay a share of the accumulated deficit in the Plan, which is estimated at £713,493, based on the last updated actuarial valuation of the Plan as at 30 September 2010. The next full actuarial valuation will be carried out during 2011.

Action

Action participates in four pension schemes and the assets of all the schemes are held separately from those of the charity.


Scheme number one is the Action Defined Benefit Scheme which was offered through the Pensions Trust. The scheme has been closed to new members since 1 October 1997. On 8 July 2011 the government announced that, in future, the Consumer Prices Index (CPI) will be used to calculate the minimum pension increases for index-linked pensions rather than the Retail Prices Index (RPI) that has been used to date. CPI assumptions have been used for the 31 March 2011 liability estimate, which has resulted in a reduction in the expected liability compared with the previous RPI assumptions. Consequently, this reduction has been recognised as a change in actuarial assumption and has been recognised in the SOFA within actuarial gains / losses.
Scheme number two is the Action Money Purchase Scheme and is open to existing and new employees. It is substantially all invested in the Pensions Trust Series 3 Scheme. The Board of the Pensions Trust has decided on actuarial advice not to apportion any share of the deficit to Growth Plan Series 3 and consequently no debt on employer currently arises from participation.

Scheme number three is a defined benefit scheme operated by Wiltshire County Council and related to staff transferred from Shelwork Industries on 1 April 2000. The Shelwork factory operation has ceased trading and therefore the majority of the members of the scheme are no longer employees of Action. On 22 June 2010 the government announced that, in future, the Consumer Prices Index (CPI) will be used to calculate the minimum pension increases for index-linked public sector pensions rather than the Retail Prices Index (RPI) that has been used to date. CPI assumptions have been used for the 31 March 2011 liability estimate, which has resulted in a reduction in the expected liability compared with the previous RPI assumptions. The fact that past statutory increases have been publicly linked to RPI means that the charity considers this to be a change in the future benefits payable to members rather than a change in actuarial inflation assumptions. Consequently, this reduction has been recognised as a negative past service cost, and the amount of £287,000 (2009/10: £nil) has been recognised within the Employee Benefits expense.

Scheme number four is the RNIB Retirement Benefits Pension Scheme of which Action became an Employer on 1 April 2009 pursuant to the Transfer of Undertakings Agreement whereby 118 scheme members transferred by TUPE to Action. With regard to Action it closed to new members with immediate effect from 1 April 2009. Under the Association Agreement with RNIB, the deficit on the scheme disclosed by the Triennial Actuarial Valuation at 31 March is the responsibility of RNIB. The FRS17 review of the whole scheme at 31 March 2011 produced a surplus of which £4,000 is attributable to Action.
CVV

CVV is a participant within the defined benefit scheme "Cardiff and Vale of Glamorgan Pension Fund" which is part of the Local Government Pension Scheme.


The following tables, and narrative, provide the detailed disclosures that relate to the RNIB Retirement Benefit Scheme. The column headed "Associated charities" refers to Action's schemes one and three, together with that for CVV. Together these explain the Group's pension costs.


b. Scheme assets and liabilities

Expected

asset

return

% p.a.

RNIB

£'000

Expected

asset

return

% p.a.

Associated charities
£'000

Total

£'000

2011

















Scheme assets at fair value
















Equities

8.40

58,388

7.50-8.40

8,524

66,912

Corporate and Other Bonds

5.20

13,529

4.10-5.10

3,160

16,689

Fixed Interest Gilts

-

-

4.40

45

45

Index-linked Gilts

4.15

44,087

-

-


44,087

Property (including unit trusts)

8.10

11,932

5.50-7.90

903

12,835

Cash and Other (including net current assets)

4.30

8,656

0.50-8.40

248

8,904

Total market value of Scheme assets

6.43

136,592

6.67-7.74

12,880

149,472

Present value of Scheme liabilities




(134,869)




(15,194)

(150,063)

Net Pension Scheme asset (liabilities)





1,723




(2,314)

(591)



b. Scheme assets and liabilities (continued)

Expected

asset

return

% p.a.

RNIB

£'000

Expected

asset

return

% p.a.

Associated charities
£'000

Total

£'000

2010
















Scheme assets at fair value
















Equities

8.50

54,483


7.80-8.40

8,095

62,578

Corporate and Other Bonds

5.50

19,106

4.20-5.50

2,983

22,089

Fixed Interest Gilts

-

-

4.50

37

37

Index-linked Gilts

4.25

28,547

-

-

28,547

Property (including unit trusts)

9.00

10,708

5.80-8.50

801

11,509


Cash and Other (including net current assets)

4.50

13,223

0.50-8.00

227

13,450

Total market value of Scheme assets

6.71

126,067

7.05-7.47

12,143

138,210

Present value of Scheme liabilities




(135,231)




(16,195)

(151,426)

Net Pension Scheme liabilities




(9,164)




(4,052)

(13,216)

The assets of the RNIB Scheme are held with Legal and General plus BlackRock (for equities and bonds), and RREEF Limited (for property). The defined benefit assets are invested according to the Statement of Investment Principles agreed by the Scheme Trustees. This sets a benchmark allocation of assets. The defined contribution assets are invested in line with member instructions. RNIB employs a building block approach in determining the long-term rate of return on pension plan assets. Historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital market principles.




c. Analysis of charge to the SOFA

RNIB
£'000

Associated charities

£'000

Total
£'000

Year to 31 March 2011










Current service cost

3,917

254

4,171

Past service cost

-

(465)

(465)

Interest cost

7,516

861

8,377

Expected return on Scheme assets

(7,938)

(869)

(8,807)


Curtailment

(487)

-

(487)

Expense (income) recognised in SOFA

3,008

(219)

2,789

Year to 31 March 2010










Current service cost

2,740

174

2,914

Interest cost

6,611

796

7,407

Expected return on Scheme assets

(5,790)

(636)

(6,426)

Expense recognised in SOFA

3,561


334

3,895

The above service cost excludes any RNIB contributions paid to the defined contributions section of the Scheme.


The Charity contributed to the Scheme at the rate of 17.6 per cent up until 30 June 2010, after which the rate fell to 12 per cent for the remainder of the year, of pensionable salaries. These rates include the cost of death in service insurance cover. During the year the Charity contributed £4,773,000 (2010: £4,051,000) to the scheme, and in the next year the Charity expects to contribute £4,402,000. In addition RNIB and Action share the administrative costs of the Scheme. RNIB also makes contributions to a number of other pension schemes including the Teachers Pension Scheme. From 1 July 2010 under the RNIB salary sacrifice arrangement employer contributions and service cost include the member salary sacrifice contributions while member contributions are shown as nil.
A redundancy exercise took place during the year resulting in a significant number of active members leaving service. This reduced the liabilities and the change has been allowed for as a curtailment gain in the charge to the SOFA.


d. Analysis of actuarial gains and losses

RNIB
£'000

Associated charities

£'000

Total
£'000

Year to 31 March 2011











Experience gains on scheme assets

1,318

156

1,474

Experience gains on scheme liabilities

1,808

216

2,024

Gains on scheme liabilities arising out of changes to the actuarial assumptions used

5,996

818

6,814

Total actuarial gain

9,122

1,190

10,312

Year to 31 March 2010









Experience gains on scheme assets


25,208

2,288

27,496

Experience gains on scheme liabilities

4,879

167

5,046

Losses on scheme liabilities arising out of changes to the actuarial assumptions used

(31,630)

(4,023)

(35,653)

Total actuarial loss

(1, 543)

(1,568)

(3,111)

In accordance with the requirements of FRS17 the full actuarial valuation at 31 March 2009 was updated by Aon Hewitt at 31 March 2011. The principal assumptions they used for this purpose are summarised in the following table.



e. Actuarial assumptions

2011

RNIB

%


2010

RNIB

%

2011

Associated charities

%

2010

Associated charities

%

Discount rate

5.55

5.55

5.50

5.50

Inflation assumption (RPI)

3.50

3.75

3.40-3.60

3.50-3.80

Inflation assumption (CPI)

-

-

2.70-2.90

-

Rate of increase in salaries

4.00

4.25

4.60-5.10

5.00-5.30


Rate of increase in pensions payments

Pre 1 July 2010 - 5% p.a. cap

Post 30 June 2010 - 3% p.a. cap


3.30

2.50

3.50

N/A


2.70-2.90

3.40-3.80


Rate of increase in deferred pensions

Pre 1 July 2010 - 5% p.a. cap

Post 30 June 2010 - 3% p.a. cap


3.50

3.00

3.75

N/A


2.70-3.40

3.50-3.80


Expected rate of return on scheme assets

6.43

6.71

6.67-7.74

7.05-7.47

For the RNIB scheme the mortality assumptions are based on standard mortality tables which allow for future mortality improvements. The assumptions are that a member currently aged 60 will live on average for a further 29 years if they are male and for a further 30 years if they are female. For a member who retires in 2031 at age 60 the assumptions are that they will live on average for a further 31 years after retirement if they are male and for a further 32 years after retirement if they are female, as last year. For schemes offered by the Associated Charities, for current Pensioners, their life expectancy beyond the pensionable age of 65 ranges between 21.3 to 23.8 years if they are male, and 23.6 to 26.6 years if they are female. For future Pensioners their life expectancy beyond the pensionable age of 65 ranges between 23.3 to 25.6 years if they are male and 25.5 to 28.6 years if they are female.



f. Changes to the present value of the defined benefit obligation

RNIB
£'000

Associated charities

£'000

Total
£'000

As at 1 April 2009

101,557

12,056

113,613

Current service cost

2,740

174

2,914

Interest cost

6,611

796

7,407

Contributions by scheme participants

1,424

47

1,471

Actuarial loss on scheme liabilities

26,751

3,856


30,607

Net benefits paid out

(3,852)

(734)

(4,586)

As at 31 March 2010

135,231

16,195

151,426

Current service cost

3,917

254

4,171

Past service cost

-

(465)

(465)

Interest cost

7,516

861

8,377

Contributions by scheme participants

501

43

544

Actuarial gain on scheme liabilities

(7,804)


(1,034)

(8,838)

Net benefits paid out

(4,005)

(660)

(4,665)

Curtailment

(487)

-

(487)

As at 31 March 2011

134,869

15,194

150,063



g. Changes to the fair value of scheme assets during the year

RNIB
£'000

Associated charities

£'000

Total
£'000

As at 1 April 2009

93,446

9,615

103,061


Expected return on scheme assets

5,790

636

6,426

Contributions by the employer

4,051

291

4,342

Contributions by scheme participants

1,424

47

1,471

Actuarial gain on scheme assets

25,208

2,288

27,496

Net benefits paid out

(3,852)

(734)

(4,586)

As at 31 March 2010

126,067

12,143

138,210

Expected return on scheme assets

7,938


869

8,807

Contributions by the employer

4,773

329

5,102

Contributions by scheme participants

501

43

544

Actuarial gain on scheme assets

1,318

156

1,474

Net benefits paid out

(4,005)

(660)

(4,665)

As at 31 March 2011

136,592

12,880

149,472

Actual return on scheme assets









2010


30,998

2,924

33,922

2011

9,256

1,025

10,281



h. Historical scheme information

2011

£'000

2010

£'000

2009

£'000

2008

£'000

2007

£'000

RNIB
















Fair value of scheme assets

136,592

126,067


93,446

110,100

110,982

Defined benefit obligation

(134,869)

(135,231)

(101,557)

(92,177)

(102,930)

Surplus (deficit) in the scheme

1,723

(9,164)

(8,111)

17,923

8,052

Gain (loss) on scheme assets

1,318

25,208

(25,316)

(9,406)

(1,435)

Gain (loss) on scheme liabilities

7,804

(26,751)

(2,531)

17,696


13,742

Total actuarial gain (loss) in year

9,122

(1,543)

(27,847)

8,290

12,307

Cumulative amount of (loss) gain recognised in SOFA

(8,313)

(17,435)

(15,892)

11,955

3,665

Associated charities
















Fair value of scheme assets

12,880

12,143

9,615

11,133

11,452

Defined benefit obligation

(15,194)

(16,195)


(12,056)

(11,867)

(12,113)

Deficit in the scheme

(2,314)

(4,052)

(2,441)

(734)

(661)

Gain (loss) on scheme assets

156

2,288

(3,132)

(1,286)

(66)

Gain (loss) on scheme liabilities

1,034

(3,856)

125

(121)

258

Total actuarial gain (loss) in year

1,190

(1,568)

(3,007)

(1,407)


192

Cumulative amount of (loss) gain recognised in SOFA

(1,973)

(3,163)

(1,595)

1,412

2,819

The historical scheme information under "Associated charities" for 2009, 2008 and 2007 excludes some information relating to CVV as this was not available.

23. Group commitments




a. Capital


At the year-end, RNIB has outstanding commitments amounting to £3,581,000 (2010: £14,356,000) relating to the RNIB Pears Centre for Specialist Learning. At the year-end Action has outstanding commitments amounting to £320,000 (2010: £100,000).

b. Operating leases


At the year-end, the Group had the following annual commitments amounting to £1,567,000 (2010: £1,494,000) under non-cancellable operating leases.





2011

£’000

2010

£’000

Land and buildings





Expiring within one year

157

80

Expiring between two and five years

751

597

Expiring after five years

380

546

Vehicles







Expiring within one year

18

33

Expiring between two and five years

211

211

Equipment







Expiring within one year

7

6

Expiring between two and five years

43

21

Total

1,567

1,494


24. Contingent liabilities

As at 31 March 2011 other than the Pensions Trust Growth Plan contingent liability disclosed in the "Pension costs" note (Note 22) there are no other group or charity contingent liabilities (2010: £336,000).



25. Grants receivable


During the year, RNIB received a number of grants and other funding resources, which are required by the donors to be shown in our annual financial statements.

Source

Purpose


£’000

Big Lottery Fund

RNIB Northern Ireland eye matter

63




Developing life skills for young people

21




Vision for life

17




Lisburn in focus

127




National Employment

150




Gullane Street/Access to Opportunities

354


Big Lottery Fund - Research Programme

Enabler

88

Awards For All Scotland

Family fun day

24




Colour Brush in Darkness Hillside Arts

10

European Social Fund

Employment and skills project

134

European Commission

AEGIS Project

13

Special EU Programmes

Sensory Engagement Programme

92

European Union (Lifelong Learning)

Bifocal VI Project

9

Department for Education and Skills

Embossed literature

200

Welsh Assembly Government

Best practice on safe, inclusive and accessible buildings for people with dementia and sight loss

13


Best practice on safe, inclusive and accessible buildings for people with learning disabilities and sight loss


13




Children's and Family Organisation Grants (CFOG)

49


Source

Purpose


£’000

Welsh Language Board

To produce Welsh language audio books for children by children. To establish forums across Wales and an on-line discussion group

7

DCELLS

The production of Welsh Language curriculum materials in multi-media format

80

Conwy Social Services Department

Welfare Rights

14

Ceredigion Social Services Department

Welfare Rights

26

Sight Support

Welfare Rights - Newport/Caerphilly

19

RS MacDonald Trust and Robertson Trust

Positive Steps

25

Guide Dogs For The Blind

UK Vision Strategy Communications


30

Department of Health

Opportunities for volunteering

96

Department of Health (Third Sector Investment)

Finding Your Feet - The Next Steps

72

Centrica

Here to help

120

Novartis Pharmaceuticals UK Ltd

To support AMD awareness work

311




Funding Eye Clinic Liaison Officers throughout the UK

535




To Support Eye Health Work

5

Pfizer

RNIB Cymru Eye Health Inequalities Project

43



Source

Purpose

£’000

Allergan

Glaucoma Sibling Awareness Project

15





Retinal Patient Support Project

26

Alcon

Understanding series leaflets

41

Museums, Libraries & Archives

MLA Culture Link Project

60

BBC Children in Need

Children and family event

39




To provide programmes and activities for blind and partially sighted children and their families

23

Waterloo Foundation

Support towards employment programme

22

Help a South Wales Child

Transitions Guide

3

Standard Life

Welfare Rights Officer

57

Margaret Murdoch Trust

Service Development Officer - Insight

3

Hugh Fraser Foundation

Service Development Officer - Insight

5

Bellahouston Bequest Fund


Service Development Officer - Insight

1

Martin Connell Charity Fund

Service Development Officer - Insight

2

Brian Mercer Charitable Trust

National Library Services

15

Charles and Jane Allen Memorial Fund

RNIB Scotland

6

Brownlie Charitable Trust

RNIB Scotland

10

Lennox Wyfold Charitable Trust

Vision

10

Kathleen Beryl Sleigh Charitable Trust

RNIB General

10

Santander Charitable Trust

RNIB Cymru

5

Patrick Frost Foundation

Action

10

J P Charley (Discretionary)

Action


17

Eveson Charitable Trust

NTNM

8

Policy on Relationships with Pharmaceutical Companies


RNIB provides services to those with sight problems, works to prevent avoidable blindness, and campaigns for positive change. These functions will not be influenced in any way by our relationships with pharmaceutical companies or by acceptance of grants or sponsorships from them. We will withdraw from any initiative that jeopardises our independence.

RNIB will not embark on, or continue with, any sponsorship arrangement or collaborative venture which might damage its independence. Novartis Pharmaceuticals UK Ltd, Pfizer, Allergan and Alcon are all pharmaceutical companies.





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