Notes to the financial statements 2019 | Finance

Notes to the financial statements

NOTES TO THE FINANCIAL STATEMENTS

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�� 1. TUITION FEES AND EDUCATION CONTRACTS��(consolidated and university)	2018/19	2017/18
Scottish higher education students	5,858	5,892
Rest of UK students	1,040	1,221
European Union (excluding UK) students	2,585	2,111
Non-European Union students	2,582	2,232
Other fees and discounts	(337)	(301)
Education contracts	2,195	1,756
��Total��	13,923	12,911
��	��	��
2. SCOTTISH FUNDING COUNCIL GRANTS��(consolidated and university)	2018/19	2017/18
Recurrent grant	��	��
Teaching	12,558	12,080
Research	1,174	1,109
Specific grants	��	��
Wider access retention premium	597	586
Regional Coherence - Academies programme	219	81
Disabled students premium	54	54
Knowledge exchange / University Innovation Fund	534	350
Scottish Drama Training Network	148	148
Capital maintenance grant released	359	297
Other miscellaneous grants	-	133
Deferred capital grants released (note16)	��	��
Land & buildings	528	588
Equipment	-	-
Total��	16,171	15,426

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3. RESEARCH GRANTS & CONTRACTS	Consolidated 2018/19 £000	Consolidated 2017/18 £000	University 2018/19 £000	University 2017/18 £000
Research councils	239	271	239	271
UK based charities	132	212	124	202
UK government and health authorities	1,497	1,270	1,484	1,256
UK private sector	7	20	-	7
European funding	81	-	81	-
Other grants & contracts	236	181	239	181
��Total��	2,192	1,954	2,167	1,917

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4. OTHER OPERATING INCOME	Consolidated 2018/19 £000	Consolidated 2017/18 £000	University 2018/19 £000	University 2017/18 £000
Residences, catering and conferences	5,250	5,033	4,884	4,784
Other services rendered	829	611	469	397
Sports centre income	223	234	223	234
Other income	540	599	887	843
��Total��	6,842	6,477	6,463	6,258

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5. INVESTMENT INCOME	Consolidated 2018/19 £000	Consolidated 2017/18 £000	University 2018/19 £000	University 2017/18 £000
Investment income on endowments	-	-	-	-
Other investment income	85	27	84	26
Net return on pension scheme	-	-	-	-
��Total��	85	27	84	26

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6. DONATIONS AND ENDOWMENTS��(consolidated and university)	2018/19	2017/18
��	£000	£000
New endowments	-	-
Unrestricted donations	305	239
��Total	305	239

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7. STAFF COSTS	Consolidated 2018/19 £000	Consolidated 2017/18 £000	University 2018/19 £000	University 2017/18 £000
Wages and salaries	17,855	18,046	17,710	17,925
Restructuring	1,101	-	1,101	-
Social security costs	1,923	1,799	1,923	1,795
Movement on USS provision	698	3	698	3
Other pension costs	5,135	4,193	5,135	4,190
��Total��	26,712	24,041	26,567	23,913

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Emoluments of the Principal and Vice-Chancellor (who was also the highest paid Member of the University Court)	2018/19 £000	2017/18 £000
Professor Petra Wend	��	��
Salary	215	210
Employers’ pension contributions	-	-
In lieu of employers’ pension contribution	32	32
Benefits in kind	2	2
Total	249	244

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There are no pension contributions for Professor Wend. The Principal opted out of the pension scheme in the previous year. Additional payments equivalent to pensions contributions foregone are included within emoluments. The head of the University’s basic salary is 5.27 times the median pay of staff, where the median pay is calculated on a full-time equivalent basis for the salaries paid by the University to its staff.

Key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the University: this comprises the Executive Board. The total compensation for the year ended 31 July 2019 (including any employers’ pension contributions) was £937,778 (year ended 31 July 2018, £915,390).

University Court members

The University Court members are the trustees for charitable law purposes and are also the directors of the company limited by guarantee for company law purposes. Due to the nature of the University’s operations and the composition of the University Court (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 University Court may have an interest. All transactions involving organisations in which a member of the University Court may have an interest are conducted at arm’s length, and in accordance with the University’s financial regulations and normal procurement procedures. University Court members receive no remuneration in respect of their duties as members of the University Court. A number of members of the University Court, including the Principal and Vice-Chancellor, receive a salary in respect of their employment with the University. Detail of such remuneration is set out below.

University Court members	2018/19 £000	Re stated 2017/18 £000
Directors’ emoluments (including pension contributions)	��	��
Fees for services as members of University Court	-	-
Emoluments (i.e. salaries as members of staff)	568	558
Contributions paid to pension schemes	57	56
Benefits in kind	5	4
��	630	618

These figures relate to 7 members of staff (2017/18: 7 as restated), including the Principal.

The number of members of staff, including the Principal, who received remuneration (including benefits and excluding pension
contributions) in the following range was:-

Members	2018/19 Numbers	2017/18 Number
Senior postholders	��	��
£100,001 to £110,000	2	1
£110,001 to £120,000	1	1
£240,001 to £250,000	1	1
��	��	��
��	2018/19	2017/18
��	£000	£000
Compensation for loss of office	��	��
Compensation payable in respect of senior post holders	-	-

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Members	2018/19 FTE number	2017/18 FTE number
Average full time equivalent staff numbers by major category: (consolidated and university)	��	��
Academic schools	194	195
Academic services	43	48
Research grants & contracts	33	36
Residences, catering & conferences	26	26
Premises	21	23
Administration & central services	108	113
��	425	441

8. INTEREST PAYABLE AND OTHER FINANCE COSTS

INTEREST PAYABLE AND OTHER FINANCE COSTS	Consolidated 2018/19 £000	Consolidated 2017/18 £000	University 2018/19 £000	University 2017/18 £000
Loan interest	1,246	1,303	1,246	1,303
Finance lease interest	-	-	-	-
Net charge on pension scheme	186	338	186	338
��	1,432	1,641	1,432	1,641

9. ANALYSIS OF TOTAL EXPENDITURE BY ACTIVITY

ANALYSIS OF TOTAL EXPENDITURE BY ACTIVITY	Consolidated 2018/19 £000	Consolidated 2017/18 £000	University 2018/19 £000	University 2017/18 £000
Academic schools	14,197	13,579	14,197	13,579
Academic services	5,177	5,162	5,177	5,162
Research grants & contracts	1,900	1,712	1,884	1,672
Other services rendered	508	464	236	307
Residences, catering and conferences	3,110	2,961	3,002	2,904
Premises	8,096	7,574	8,096	7,574
Administration & central services	7,845	8,457	7,836	8,454
Other expenses	4,729	2,498	4,729	2,498
Total per income and expenditure account	45,562	42,407	45,157	42,150

10. TAXATION (consolidated and university)

TAXATION (consolidated and university)	2018/19 £000	2017/18 £000
UK Corporation Tax payable	-	-

TAXATION (consolidated and university)

2018/19

£000

2017/18

£000

UK Corporation Tax payable

11. OTHER OPERATING EXPENSES

OTHER OPERATING EXPENSES	Consolidated 2018/19 £000	Consolidated 2017/18 £000	University 2018/19 £000	University 2017/18 £000
External auditors – audit fees	71	50	66	47
External auditors – non-audit fees	-	48	-	48
Internal audit	44	27	44	27
Grants to 91��Ƭ Students Union	240	240	240	240
Other expenses	11,328	11,185	11,073	11,059
��	11,683	11,550	11.423	11,421

12. TANGIBLE ASSETS
Consolidated and University

TANGIBLE ASSETS	Freehold land & buildings Owned £000	Fixtures, fittings & equipment Owned £000	Fixtures, fittings & equipment Held under finance leases £000	TOTAL £000
Cost or valuation:	��	��	��	��
At 1 August 2018	107,486	9,841	1,271	118,598
Disposals at cost	-	(1,148)	-	(1,148)
Additions at cost	-	1,011	-	1,011
Revaluation of buildings	22,421	-	-	22,421
At 31 July 2019	129,907	9,704	1,271	140,882
��	��	��	��	��
Depreciation:	��	��	��	��
At 1 August 2018	6,705	8,578	1,244	16,527
Written off on disposals	-	(1,148)	-	(1,148)
Written back due to revaluation	(8,193)	-	-	(8,193)
Provided during the year	4,950	758	27	5,735
At 31 July 2019	3,462	8,188	1,271	12,921
��	��	��	��	��
Net book amount at 31 July 2019	126,445	1,516	-	127,961
��	��	��	��	��
Net book amount at 1 August 2018	100,781	1,263	27	102,701
��	��	��	��	��
Analysis of net book amount at 31 July 2019	��	��	��	��
Financed by capital grant	8,207	-	-	8,207
Other	118,238	1,516	-	119,754
��	��	��	��	��
��	126,445	1,516	-	127,961

The valuation of the academic estate was carried out at 31 July 2018 by Gerald Eve, Chartered Surveyors. The basis of the valuation, which was carried out in accordance with guidelines issued by the Royal Institution of Chartered Surveyors, is depreciated replacement cost. Having reviewed the relevant indices, management has concluded that no revision is required to the valuation included in the financial statements as at 31 July 2019. The student accommodation was valued as at 31 July 2019, also by Gerald Eve LLP. This valuation was prepared in accordance with the requirements of the RICS Valuation - Global Standards (July 2017 edition) and Financial Reporting Standard 102 and the 2019 Statement of Recommended Practice ‘Accounting for Further and Higher Education’. The valuation was undertaken on a Fair Value basis, equated to Market Value on the assumption of a continuation of the existing use.

Barclays Bank plc holds a standard security, dated 17 December 2014, over the student accommodation situated on the University campus.

The University has a modest collection of works of art and other items of historical interest. No value is included within fixed assets in respect of this collection as it is not considered to be material.

13. INVESTMENTS
Subsidiary Undertaking

Name of undertaking	Country of incorporation and registration	Description of shares held	Proportion of nominal value of shares held (%)	Cost at 1 August 2018 and 31 July 2019 (£)
91��Ƭ Enterprises Ltd	Scotland	Ordinary £1 shares	100	100
��	��	��	��	100

91��Ƭ Enterprises Limited undertakes activities which, for legal or commercial reasons, are more appropriately channelled through a separate limited company. These activities include vacation letting, conferences and rendering of services (other than research) for a variety of commercial and other organisations. The results of 91��Ƭ Enterprises Limited have been consolidated into the group financial statements.

14. TRADE AND OTHER RECEIVABLES

TRADE AND OTHER RECEIVABLES	Consolidated 2019 £000	Consolidated 2018 £000	University 2019 £000	University 2018 £000
Amounts falling due within one year:	��	��	��	��
Trade debtors	858	1,040	677	905
Prepayments and accrued income	851	671	784	671
Amounts due from subsidiaries	-	-	364	406

15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR	Consolidated 2019 £000	Consolidated 2018 £000	University 2019 £000	University 2018 £000
Secured loans (see note 16)	1,492	32,070	1,492	32,070
Trade creditors	1,886	2,070	1,885	2,015
Social security and other taxation payable	568	552	568	512
Accruals and deferred income	4,238	3,546	4,027	3,422
Unsecured loans	35	35	35	35
Finance lease commitments due within one year	-	-	-	-
��Total��	8,219	38,273	8,007	38,054

The secured long-term loan facility with Barclays Bank plc is £30.6 million, and has a final maturity date of 17 December 2024. The loan is secured over part of the campus site at Musselburgh. The University has entered into a fixed-rate arrangement in order to protect itself against any significant fluctuations in interest rates. The terms of this arrangement are commercially confidential. At 31 July 2018, as a result of an anticipated covenant breach, which was subsequently waived by Barclays Bank plc, the full amount of the outstanding loan was included within Creditors: amounts falling due within one year in line with FRS 102.

16. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR	Consolidated & University 2019 £000	Consolidated & University 2018 £000
Secured loans (see note 15)	29,086	-
Unsecured loans	125	154
Deferred capital grants	8,207	8,735
��	37,418	8,889
Analysis of secured loans:-	��	��
Due between one and two years	1,492	-
Due between two and five years	4,475	-
Due in five years or more	23,119	-
��	��	��
Total due after more than one year	29,086	-
Due within one year (note 15)	1,492	32,070
��	��	��
Total secured loans	30,578	32,070
��	��	��
Analysis of unsecured loans:-	��	��
Due between one and two years	35	35
Due between two and five years	90	86
Due in five years or more	-	33
��	��	��
Total due after more than one year	125	154
Due within one year (note 15)	35	35
��	��	��
Total unsecured loans	160	189

Analysis of deferred capital grants

Analysis of deferred capital grants	Consolidated & University 2019 £000	Consolidated & University 2018 £000
Opening balance : buildings	8,735	9,323
Opening balance : equipment	-	-
��	8,735	9,323
��	��	��
Receivable : buildings	-	-
Receivable : equipment	-	-
��	��	��
Release : buildings	528	588
Release : equipment	-	-
��	528	588
��	��	��
Closing balance : buildings	8,207	8,735
Closing balance : equipment	-	-
��	8,207	8,735

17. PROVISIONS FOR LIABILITIES

Consolidated and University Pensions £000	Obligation to fund deficit on USS Pension £000	Pension enhancements £000	Defined Benefit Obligations LGPS £000	Total Pensions Provisions £000
At 1 August 2018	372	3,021	5,823	9,216
Utilised in year	(21)	(227)	-	(248)
Transfer (to)/from income & expenditure account	729	217	9,502	10,448
At 31 July 2019	1,080	3,011	15,325	19,416

The University has a liability to fund the past deficit on the Universities Superannuation Scheme (USS). This obligation arises from the contractual obligation with the pension scheme for total payments relating to benefits arising from past performance. The University has assessed future staff levels within the USS scheme and salary inflation over the period of the contractual obligation in assessing the value of this provision. Further information is provided in note 20(C). Since the year end, following the completion of the 2018 actuarial valuation, a new deficit recovery plan has been agreed, of which more details are given in note 20(C). As at 31 July 2019 and assuming all other assumptions used to calculate the provision remain unchanged, this would have resulted in a revised provision of £0.593 million, a decrease of £0.486 million from the current year end provision.

The University also has a liability for pension enhancements payable to former members of staff who have taken early retirement in prior years. An actuarial valuation of the amount of this liability was carried out by Hymans Robertson, Actuaries, at 31 July 2019, on the basis of valuation prescribed by FRS 102, and using the same set of assumptions as are set out in note 20 in relation to the valuation of the Local Government Pension Scheme.

Detail of the movement in the Local Government Pension Scheme (LGPS) provision is set out in note 20(A).

18. ENDOWMENT RESERVES

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ENDOWMENT RESERVES Consolidated and University Unrestricted	Consolidated and University Restricted Expendable £000	Consolidated and University Restricted Permanent £000	Restricted Total £000	Total�� £000
Balance at 1 August 2018	-	518	47	565
��	��	��	��	��
Income for year	-	305	-	305
Expenditure for year	-	(228)	-	(228)
��	��	��	��	��
At 31 July 2019	-	595	47	642
��	��	��	��	��
Represented by:	��	��	��	��
Capital value	-	-	35	35
Accumulated income	-	595	12	607
��	-	595	47	642

19. REVALUATION RESERVE

REVALUATION RESERVE	Consolidated and University 2019 £000	Consolidated and University 2018 £000
At 1 August	31,132	31,132
Revaluation Gains	30,614	-
Release to general reserve	(334)	-
At 31 July	61,412	31,132

20. PENSIONS AND SIMILAR OBLIGATIONS

The University’s employees belong to three principal pension schemes, the Scottish Teachers Superannuation Scheme (STSS), the Local Government Pension Scheme (LGPS) and the Universities Superannuation Scheme (USS). The total pension cost for the year was £5,833,000 (2017/18: £4,196,000).

PENSIONS AND SIMILAR OBLIGATIONS	Consolidated and University Year ended 31 July 2019	Consolidated and University Year ended 31 July 2018
The total pension charge is analysed as follows:-	£000	£000
Lothian Pension Fund (LGPS)	3,211	2,493
Scottish Teachers Superannuation Scheme	1,642	1,437
Universities Superannuation Scheme	980	266
��	5,833	4,196

Estimated employers’ pension contributions for the year to 31 July 2020 are £3,615,000.

A ) Local Government Pension Scheme (LGPS)

The Lothian Pension Fund is a funded multi-employer defined benefit scheme, with the assets held in a separate trustee-administered fund to meet long-term pension liabilities to past and present employees. The trustees of the fund are required to act in the best interests of the fund’s beneficiaries. The appointment of trustees to the fund is determined by the scheme’s trust documentation. The trustees are responsible for setting the investment strategy for the scheme after consultation with professional advisors.

The following information is based upon a full actuarial valuation of the fund at 31 March 2017 updated to 31 July 2019 by a qualified independent actuary, Hymans Robertson LLP.

Assumptions at	31 July 2019	31 July 2018	31 July 2017
Pension increase rate	2.4%	2.4%	2.5%
Salary increase rate	4.1%	4.1%	4.5%
Discount rate	2.1%	2.8%	2.7%

The fund is valued every three years by professionally qualified independent actuaries using the projected unit credit method, the rates of contribution payable being determined by the trustees on the advice of the actuaries. In the intervening years, the scheme actuary reviews the progress of the scheme. The actuary has indicated that the resources of the scheme are likely, in the normal course of events, to be sufficient to meet the liabilities as they fall due at the level specified by the scheme regulations.

The currently agreed employer’s contribution rate for the University is 19.5%. This is due to increase to 20.0% from 1 April 2020.

20. PENSIONS AND SIMILAR OBLIGATIONS (continued)

A ) Local Government Pension Scheme (LGPS) (continued)

The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which, due to the timescales covered, may not necessarily be borne out in practice. The current mortality assumptions, which are consistent with those used for the latest formal funding valuation, include sufficient allowance for future improvements in mortality rates. The assumed life expectations on retirement at age 65 are:-

Members	31 July 2019 No. of years	31 July 2018 No. of years
Current pensioners	��	��
Males	21.7	21.7
Females	24.3	24.3
Future pensioners	��	��
Males	24.7	24.7
Females	27.5	27.5

Analysis of the amount shown in the balance sheet

Members	Value at 31 July 2019 £000	Value at 31 July 2018 £000	Value at 31 July 2017 £000	Value at 31 July 2016 £000	Value at 31 July 2015 £000
Estimated employer assets (A)	63,223	57,343	57,322	50,644	40,901
��	��	��	��	��	��
Present value of scheme liabilities	(77,851)	(62,495)	(68,492)	(63,303)	(50,918)
Present value of unfunded liabilities	(697)	(671)	(701)	(769)	(804)
��	��	��	��	��	��
Total value of liabilities (B)	(78,548)	(63,166)	(69,193)	(64,072)	(51,722)
Net pension liability (A) – (B)	(15,325)	(5,823)	(11,871)	(13,428)	(10,821)

Analysis of movements in the present value of the scheme liabilities

scheme liabilities	31 July 2019 £000	31 July 2018 £000
Opening defined benefit obligation	63,166	69,193
Current service cost	2,276	2,580
Interest cost	1,789	1,891
Contributions by members	437	424
Actuarial losses	11,019	(9,683)
Past service costs	1,074	-
Unfunded benefits paid	(49)	(48)
Benefits paid	(1,164)	(1,191)
Closing defined benefit obligation	78,548	63,166

Analysis of movement in the market value of the scheme assets

scheme assets	31 July 2019 £000	31 July 2018 £000
Opening fair value of employer assets	57,343	57,322
Expected return on assets	3,660	(2,006)
Contributions by members	437	424
Contributions by employer	1,334	1,241
Contributions in respect of unfunded benefits	49	48
Actuarial (losses)/gains	1,613	1,553
Unfunded benefits paid	(49)	(48)
Benefits paid	(1,164)	(1,191)
Closing fair value of employer assets	63,223	57,343

20. PENSIONS AND SIMILAR OBLIGATIONS (continued)

A ) Local Government Pension Scheme (LGPS) (continued)

Guaranteed minimum pension (GMP) was accrued by members of the Local Government Pension Scheme (LGPS) between 6 April 1978 and 5 April 1997. The value of GMP is inherently unequal between males and females for a number of reasons, including a higher retirement age for men and GMP accruing at a faster rate for women. However overall equality of benefits was achieved for public service schemes through the interaction between scheme pensions and the Second State Pension.

The introduction of the new Single State Pension in April 2016 disrupted this arrangement and brought uncertainty over the ongoing indexation of GMPs, which could lead to inequalities between men and women’s benefits. As an interim solution to avoid this problem, GMP rules were changed so that the responsibility for ensuring GMPs kept pace with inflation passed in full to pension schemes themselves for members reaching state pension age between 6 April 2016 and 5 April 2021. This new responsibility leads to increased costs for schemes (including the LGPS) and hence scheme employers. The fund’s actuary has carried out calculations in order to estimate the impact that the GMP indexation changes will have on the liabilities of 91��Ƭ for financial reporting purposes. The estimate assumes that the permanent solution eventually agreed will be equivalent in cost to extending the interim solution to all members reaching state pension age from 6 April 2016 onwards.

The estimate as it applies to 91��Ƭ is that total liabilities could be 0.23% higher as at 31 July 2019, an increase of approximately £174,000. This increased liability has been reflected in the revised accounting report as a past service cost. These numbers are approximate estimates based on employer data as at 31 March 2017 and will be revised at the upcoming valuation.

B ) Scottish Teachers’ Superannuation Scheme (STSS)

The STSS is an unfunded multi-employer defined benefit scheme. The Scheme is financed by contributions from employers and current members of the Scheme. The contributions paid to the Scheme fall into general government revenues. There is no actual fund of assets but an account is maintained of a notional fund made up of contributions paid by employers and members, supplemented by a return on the notional fund at a pre-determined rate and reduced by benefits as and when they are paid to retired and former members of the Scheme. The University is unable to identify its share of the underlying assets and liabilities of the scheme. Accordingly, the University has accounted for its contributions as if it were a defined contribution scheme. The University has no obligation for other employers’ obligations to the multi-employer scheme.

The last full actuarial and funding valuation of the scheme was carried out at 31 March 2016. This valuation used the Projected Unit Methodology, and was carried out in accordance with the Public Service Pensions (Valuations and Employer Cost Cap) Directions 2014 (as amended). As a result of this valuation, the employer contribution rate has increased from 17.2% to 23.0% with effect from 1 September 2019. Employee contributions are dependent upon the member’s salary bracket. The notional fund at 31 March 2016 amounted to £21.5 billion, and total scheme liabilities for service amounted to £22.8 billion, giving a notional past service deficit of £1.3 billion, which is being repaid by a supplementary rate of 4.3% of employers’ pension contributions over a 15-year period from 1 April 2019. This contribution is included in the 23.0% employers’ contribution rate.

As the scheme is unfunded, there can be no deficit or surplus to distribute on the wind-up of the scheme or withdrawal from the scheme.

C ) Universities Superannuation Scheme (USS)

The University participates in the Universities Superannuation Scheme, which is a hybrid pension scheme, providing defined benefits (for all members), as well as defined contribution benefits. The assets of the scheme are held in a separate trustee-administered fund. Because of the mutual nature of the scheme, the scheme’s assets are not attributed to individual institutions and a scheme-wide contribution rate is set. The University is therefore exposed to actuarial risks associated with other institutions’ employees and is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis. As required by Section 28 of FRS 102 “Employee benefits”, the University therefore accounts for the scheme as if it were a wholly defined contribution scheme. As a result, the amount charged to the consolidated Statement of Comprehensive Income and Expenditure represents the contributions payable to the scheme in respect of the accounting period.

The University has entered into an agreement (the Recovery Plan) that determines how each employer within the scheme will fund the overall deficit). In accordance with the requirements of the SORP, the University recognises a liability for the contributions payable that arise from the agreement (to the extent that they relate to the deficit), and therefore an expense is recognised.

The latest available complete actuarial valuation of the Retirement Income Builder section of the Scheme is at 31 March 2017 (the valuation date), which was carried out using the projected unit method. As at the year end a valuation as at 31 March 2018 was underway but not yet complete. Since the University cannot identify its share of the assets and liabilities in the Retirement Income Builder section of the scheme, the following disclosures reflect those relevant for the section as a whole.

The 2017 valuation was the fourth valuation for USS under the scheme-specific funding regime introduced by the Pensions Act 2004, which requires schemes to adopt a statutory funding objective, which is to have sufficient and appropriate assets to cover their technical provisions. At the valuation date, the value of the assets of the scheme was £60.0 billion and the value of the scheme’s technical provisions was £67.5 billion indicating a shortfall of £7.5 billion and a funding ratio of 89%.