Annual Report and Accounts 2012/13 - Royal Bournemouth Hospital

Financial Accounts1.3 Expenditure on employeebenefitsShort-term employee benefitsSalaries, wages and employment-relatedpayments are recognised in the periodin which the service is received fromemployees. The cost of annual leaveentitlement earned but not taken byemployees at the end of the period isrecognised in the financial statements tothe extent that employees are permittedto carry forward leave into the followingperiod.Pension costsPast and present employees are coveredby the provisions of the NHS PensionsScheme. Details of the benefits payableunder these provisions can be foundon the NHS Pensions website at www.nhsbsa.nhs.uk/pensions. The Scheme isan unfunded, defined benefit scheme thatcovers NHS employers, GP practices andother bodies, allowed under the directionof the Secretary of State, in Englandand Wales. The scheme is not designedto be run in a way that would enableNHS bodies to identify their share of theunderlying scheme assets and liabilities.Therefore, the scheme is accounted for asif it were a defined contribution scheme:the cost to the NHS Body of participatingin the scheme is taken as equal to thecontributions payable to the scheme forthe accounting period.In order that the defined benefitobligations recognised in the financialstatements do not differ materially fromthose that would be determined at thereporting date by a formal actuarialvaluation, the FReM requires that “theperiod between formal valuations shall befour years, with approximate assessmentsin intervening years”. An outline of thesefollows:Accounting valuationA valuation of the scheme liability iscarried out annually by the schemeactuary as at the end of the reportingperiod. Actuarial assessments areundertaken in intervening years betweenformal valuations using updatedmembership data and are acceptedas providing suitably robust figuresfor financial reporting purposes. Thevaluation of the scheme liability as at 31March 2013, is based on the valuationdata as 31 March 2012, updated to 31March 2013 with summary global memberand accounting data. In undertaking thisactuarial assessment, the methodologyprescribed in IAS 19, relevant FReMinterpretations, and the discount rateprescribed by HM Treasury have alsobeen used.The latest assessment of the liabilities ofthe scheme is contained in the schemeactuary report, which forms part of theannual NHS Pension Scheme (Englandand Wales) Pension Accounts, publishedannually. These accounts can be viewedon the NHS Pensions website. Copiescan also be obtained from The StationeryOffice.Full actuarial (funding) valuationThe purpose of this valuation is to assessthe level of liability in respect of thebenefits due under the scheme (takinginto account its recent demographicexperience), and to recommend thecontribution rates.The last published actuarial valuationundertaken for the NHS Pension Schemewas completed for the year ending 31March 2004. Consequently, a formalactuarial valuation would have beendue for the year ending 31 March 2008.However, formal actuarial valuations forunfunded public service schemes weresuspended by HM Treasury on value formoney grounds while consideration isgiven to recent changes to public servicepensions, and while future scheme termsare developed as part of the reforms topublic service pension provision due in2015.The Scheme Regulations were changedto allow contribution rates to be setby the Secretary of State for Health,with the consent of HM Treasury, andconsideration of the advice of the SchemeActuary and appropriate employee andAnnual Report and Accounts 2012/13 23