TRUSTEES' REPORT AND ACCOUNTS 2022
32 Pension arrangements
The RSPCA operates a pension arrangement that is held separately
under the RSPCA Pension Scheme (the Scheme) and has defined
benefit and defined contribution sections. The Scheme has
a trustee board, which includes an independent trustee. The
trustees have responsibility for obtaining valuations of the fund,
administering benefit payments and investing the Scheme's
assets. The trustees delegate some of these functions to their
professional advisers where appropriate.
Based on FRS 102, the financial reporting standard in the UK,
the amount by which the liabilities exceed the assets of the
defined benefit section of the pension scheme decreased by
£0.3 million in 2022 to £10.8 million (2021: £11.1 million). The small
improvement in scheme funding is mostly due to significant
improvement from the change in financial actuarial assumptions
partly offset by substantial losses on the Scheme's assets.
Since 2021, and following a strategic review of pension arrangements,
the defined contribution (DC) pension provision offered by the
charity is through a master trust arrangement with Legal & General.
Reserves
The RSPCA holds two types of reserve - restricted and
unrestricted. The group reserves additionally include restricted
and unrestricted reserves held in the subsidiary companies.
Restricted reserves are the balance on endowment funds and
restricted funds; these are held pending their application to
the activity specified by the donor. As at 31 December 2022,
the balance of restricted reserves within the charity was
£19.5 million (2021: £20.4 million).
Unrestricted reserves are funds that are expendable at the
discretion of the trustees in furtherance of the charity's objects.
They are made up of:
l Designated funds (£141.4m)
A permanent designated fund is matched to fixed assets, as
this cannot be quickly utilised to realise cash in the event this
is required. The part of the general fund represented by fixed
assets is therefore excluded from the free reserves calculation,
as generally a charity could not dispose of all or the majority
of these assets and continue its operations as a going concern.
Designated funds are also set aside for approved capital
expenditure and investment in strategic projects such as the
medium-to-long-term investment in engagement and income
generation and the organisational transformation programme
(see Note 18 for details).
As at 31 December 2022, the balance of designated funds was
£141.4 million (2021: £142.4m).
l General funds (£121.0m)
Free reserves are calculated as total funds, less restricted
reserves and designated funds. This definition takes full account
of the pension liability.
The pension reserve represents the pension liability recorded
in the consolidated and charity balance sheet and is calculated
annually for accounting purposes under FRS 102. This liability does
not result in any immediate requirement to pay this amount
to the pension scheme, and ongoing cash contributions into
the Scheme are met through budgeted income, so there is no
requirement to ring-fence an amount equal to the full deficit
from other reserves to cover this liability.
The Board reviewed the reserves policy during the year and
free reserves will continue to be held for the following reasons:
l to meet working capital requirements
l to protect the RSPCA against income fluctuations
l to fund strategic initiatives over the three-year planning period
l as an 'adversity' or continuity reserve - to protect the
RSPCA's operations against unplanned adverse events.
Consideration has been given to the level of reserves required
to meet the risk in each of these categories and the following
target levels have been agreed:
l a working capital reserve of between £10 million and £20 million
l a reserve to protect against falls in legacy income of £10 million
l a continuity reserve of £65 million
l a total free reserve of between £85 million and £95 million.
Ben Harrott was the overall winner of the
2022 RSPCA Young Photographer Awards, seen
here with RSPCA President Chris Packham.