RNLI vs Daily Mail

[john_morris_uk]

This is what the RNLI wrote :

We say: Our assets, on the whole, are our 238 lifeboat stations, many of them in unique and challenging coastal locations; our lifeboats, which can cost more than £2M; launching equipment and our regional and HQ buildings and account for around 62% of our £712 million assets . It costs £180m a year to run the RNLI and we are advised by the Charity Commission that, to be a responsible charity, we have to have enough in the bank to ensure that if all fundraising stopped today we could keep running our crucial service for between 6-12 months. We provide an essential emergency service so it is imperative that we have enough reserves to continue our rescue service whatever happens. We also have to ensure we have enough surplus funds for planned capital expenditure over the next few years – the ongoing upgrade of our aging fleet and the provision of new lifeboat stations in some locations.

In 2016, our assets reduced by around £43M and investments reduced by around £3M, so the idea that it increases each year is simply not true.


Wrong.

Their assets in 2016 INCREASED by £16.1million .

OTOH their unfunded deferred pension liability (as calculated by their actuary) by a whopping £57.7million in the year to £80.5 million. This meant that their net assets fell by approximately the amount they stated. In other words the fall in net assets was due to an increase in liabilities and not to a fall in assets as they stated.

As presented – IMHO - the explanation is either incompetent or blatently dishonest. (I don't think they would have released this to the press without first passing it to their finance people.)

It should be noted that the unfunded pension liability FELL by £30m in 2017. An increase of £57.7m one year and a fall of £30m the next would certainly excite my curiosity either as a member or as an auditor. Did the market value of investments increase so much in the year or did so many beneficiaries die off?

Are you an accountant? If you are you will know that there are lots of ways of expressing assets and like abilities. Some more imaginative than others. I’m not and accountant and I only know this because I mentioned this story to an insolvency practitioner earlier this evening. There may be questions about the accounts and the way things are expressed but I’m no where near convinced the RNLI is lying. Not in the sneaky underhand just enough truth in it not to be sued twisted way the Mail sometimes reports stories.

 

[Sybarite]

Are you an accountant? If you are you will know that there are lots of ways of expressing assets and like abilities. Some more imaginative than others. I’m not and accountant and I only know this because I mentioned this story to an insolvency practitioner earlier this evening. There may be questions about the accounts and the way things are expressed but I’m no where near convinced the RNLI is lying. Not in the sneaky underhand just enough truth in it not to be sued twisted way the Mail sometimes reports stories.

I find it difficult to accept that a competent body would confuse something as basic as "Assets" with "Net Assets" (ie assets less liablities) especially since the results obfuscate a very significant fact : that the pension liability is one of the most important issues in the balance sheet.

I qualified as a chartered accountant and, when I retired, I resigned from the Institute which means that I may no longer use the title.

There are not that many different ways of expressing assets and liabilities. In this instance the biggest caption requiring an assessment is the actuarial determination of a future pension liability. That is why they resort to an actuary.

However, given the movements from one year to the next he would appear to be having a hard time. (PS This is not to suggest that he got it wrong.)

 

[grumpy_o_g]

Its not the RNLI as we know it.

Who exactly is "we"? It's the RNLI as I know it and it's the only one we've got.

 

[grumpy_o_g]

Don't think any sailer doubts the guys who man the boats, but there does seem to be a problem with the higher management.
I am increasingly suspicious of the ethics of many of the 'charities'. Are they doing good, or looking after themselves? The RNLI does great work in saving lives. I would like to think that retired senior military personnel would work for them for a nominal salary. Seems not.

What's the problem exactly? They seem to be a transparent organisation and there's not been any issues around misappropriation or hiding spending activities, just some (possibly justifiably) people dis-agreeing with what it's being spent on. Likewise I haven't heard anything suggesting they aren't doing anything that doesn't ultimately aim to save lives.

The rebuttal from them regarding the disputes seems reasonable. Compared to other charities, never mind corporates, the RNLI has an excellent track record if the ones we've heard about are the only issues they have with their volounteers. They're all human beings and not perfect but I think they're all trying to do their jobs to the best of their ability.

 

[grumpy_o_g]

A job that is bigger and more serious than being on call all the time to face the serious risk of injury and death to directly save lives. I find your post rather distasteful.

Bigger yes, unquestionably as they impact far more than the immediate rescue. Whether it's bigger or not is not important though as everyone has to play their part for the ssytem to work.

More serious is a meaningless question - do you mean more critical? The person who attached the brake pipes to your car and the person who designed the braking system don't press the brake pedal on your car - are you saying that it doesn't matter how well they do their job as it's you that directly initiates the action? I'd suggest that your inference that it's only those directly are involved that are important is exceedingly distasteful to many people - it didn't take the military long to work out how important cooks are for example.

What an utterly stupid outlook to have...

 

[Seajet]

it's a long time since - if ever - it was the RNLI we fondly imagined.

A great chum is from a family long tradition of lifeboat crew, at his station there was a similar but little publicised mutiny quite a few years ago.

Now they have lost at least two top people, who had followed their medal winning father into the RNLI until ' management ' amateur politicians / self servants p'd off them and other crew beyond the limit.

 

[grumpy_o_g]

This is what the RNLI wrote :

"We say: Our assets, on the whole, are our 238 lifeboat stations, many of them in unique and challenging coastal locations; our lifeboats, which can cost more than £2M; launching equipment and our regional and HQ buildings and account for around 62% of our £712 million assets . It costs £180m a year to run the RNLI and we are advised by the Charity Commission that, to be a responsible charity, we have to have enough in the bank to ensure that if all fundraising stopped today we could keep running our crucial service for between 6-12 months. We provide an essential emergency service so it is imperative that we have enough reserves to continue our rescue service whatever happens. We also have to ensure we have enough surplus funds for planned capital expenditure over the next few years – the ongoing upgrade of our aging fleet and the provision of new lifeboat stations in some locations.

In 2016, our assets reduced by around £43M and investments reduced by around £3M, so the idea that it increases each year is simply not true."


Wrong.

Their assets in 2016 INCREASED by £16.1million .

OTOH their unfunded deferred pension liability (as calculated by their actuary) INCREASED by a whopping £57.7million in the year to £80.5 million. This meant that their net assets fell by approximately the amount they stated. In other words the fall in net assets was due to an increase in liabilities and not to a fall in assets as they stated.

As presented – IMHO - the explanation is either incompetent or blatently dishonest. (I don't think they would have released this to the press without first passing it to their finance people.)

It should be noted that the unfunded pension liability FELL by £30m in 2017. An increase of £57.7m one year and a fall of £30m the next would certainly excite my curiosity either as a member or as an auditor. Did the market value of investments increase so much in the year or did so many beneficiaries die off?

Let's be honest here - it doesn't need a significant increase or decrease in assets or liabilities to excite your curiosity about the RNLI's finances. Their accounts are available for download and inspection so knock yourself out. If you can't understand why the unfunded pension liability fell by £30MM you obviously haven't been following the stock market and such things - most pension fund liabilities should have dropped dramatically - some are operating in the black for the first time in decades.

 

[grumpy_o_g]

I find it difficult to accept that a competent body would confuse something as basic as "Assets" with "Net Assets" (ie assets less liablities) especially since the results obfuscate a very significant fact : that the pension liability is one of the most important issues in the balance sheet.

I qualified as a chartered accountant and, when I retired, I resigned from the Institute which means that I may no longer use the title.

There are not that many different ways of expressing assets and liabilities. In this instance the biggest caption requiring an assessment is the actuarial determination of a future pension liability. That is why they resort to an actuary.

However, given the movements from one year to the next he would appear to be having a hard time. (PS This is not to suggest that he got it wrong.)

I would agree with that if I were an accountant - as I have to work with both financial and technical people I can assure you that there are many, many different ways of expressing assets and liabilities. I've had to clean up some of the fixed asset registers of a very large organisation and until you've seen what an IT department can do to a FAR or a balance sheet you have no idea just how many ways there are of interpreting assets and liabilities .

It wasn't well worded but I suspect the actual meaning would probably be interpreted correctly by most people not familiar with a "proper" balance sheet. Ironically it rather reassures me that the RNLI makes such mistakes sometimes and doesn't handle this sort of thing so well - a financially motivated corporation would be totally slick at dealing with sort of thing ans spend a lot of money people who were really good at it.

 

[grumpy_o_g]

As I copy and pasted what you wrote, (without editing it in any way) I’d need to have a serious look into the forum archives to see why there is this claimed discrepancy.

I am reminded of George Bernard Shaw's comment regarding wrestling with pigs Sir...

 

[john_morris_uk]

I am reminded of George Bernard Shaw's comment regarding wrestling with pigs Sir...

Thank you. I will try to remember that more often before I engage in pointless exercises in trying to talk sensibly and rationally with some forumites. .

 

[nortada]

Sorrybut as ever the Wail is the one in the wrong. Every organisation tgat deals in some way with vulnerable people and childrsn is required by law to co sider safeguarding and should an inciddnt occur the RNLI would be liable fir considerable damages so oerhaps the salary is a good investment.

To understand how the Wail operates see https://stopfundinghate.org.uk. Whilst perhaps not as bad as the Express the Wail used fake photos to pillory our troops and as some one else pointed out is nit worthy of being used as toilet paper.

Hope you don’t mind me asking but having just read you post, were you a star in ‘ello, ‘ello

Strikes me all a bit of a storm in a tea-cup, or should that read, coffee-mug

 

[Sybarite]

Let's be honest here - it doesn't need a significant increase or decrease in assets or liabilities to excite your curiosity about the RNLI's finances.

Ad hom yet again.

Their accounts are available for download and inspection so knock yourself out.

As I have been doing for about 10 years. The first impressions I gained have not been dispelled with time.

If you can't understand why the unfunded pension liability fell by £30MM you obviously haven't been following the stock market and such things - most pension fund liabilities should have dropped dramatically - some are operating in the black for the first time in decades.

You who seem to know so much about it please explain to me (with reference to the stock market) why the unfunded deferred pension liability could have moved as follows :

2015 £22.6m
2016 £80.5m
2017 £50.5m

I'm open to reasonable explanations.

 

[laika]

A great chum is from a family long tradition of lifeboat crew, at his station there was a similar but little publicised mutiny quite a few years ago.

Now they have lost at least two top people, who had followed their medal winning father into the RNLI until ' management ' amateur politicians / self servants p'd off them and other crew beyond the limit.

So what you're saying is that the Mail's claims that mass resignations are due to the recent "perestroika", apparently by bolshevic infiltrators promoting inclusion and safeguarding, are bunkum because people quitting over grievances with their manager has been happening, as it does in any large organisation, for years?

 

[Sybarite]

I would agree with that if I were an accountant - as I have to work with both financial and technical people I can assure you that there are many, many different ways of expressing assets and liabilities.

As one of the basic principles of accounting standards is to allow the comparability of different organizations there are NOT "many many different ways of expressing assets and liabilities".

Assets and liabilities are generated at historic cost. Judgements may then come into play with asset values for example in applying provisions for old stocks, bad and doubtful debts, or the period over which fixed assets should be depreciated.

I've had to clean up some of the fixed asset registers of a very large organisation and until you've seen what an IT department can do to a FAR or a balance sheet you have no idea just how many ways there are of interpreting assets and liabilities

.

You would appear to confusing errors with different accounting principles. And when you say I have no idea how many ways there are, you are ignoring the fact that I have a lifetime in financial roles, including audit and perhaps could teach you a few. Like for example when I found 13 frauds one year when auditing a bank.

It wasn't well worded but I suspect the actual meaning would probably be interpreted correctly by most people not familiar with a "proper" balance sheet. Ironically it rather reassures me that the RNLI makes such mistakes sometimes and doesn't handle this sort of thing so well - a financially motivated corporation would be totally slick at dealing with sort of thing ans spend a lot of money people who were really good at it.

I don't accept that for one minute. When a major organization publishes a rebuttal to an attack by a major newspaper they darn well should be sure that the information is straightforward and clear and correct. IMHO the person who authorized this rebuttal is not at his place in the organization. I feel that the response was intended to divert attention from the pension liability - but then that is only IMHO.

I also understand John Morris' knee-jerk defense of the RNLI. I had occasion to see the same sort of reactions when having to announce to an employer that a trusted employee was defrauding his business. An immediate refusal to believe until you explain that the typical profile of a frauder is someone with at least 10 years seniority and holding a position of trust in the organization .

 

[robertj]

Except that that isn't what RichardS said.

What he said was "As usual, it seems to me another RNLI statement full of lies, half truths and exaggerations "

Editing a quote to suit one's own agenda ..... now that is a typical Daily Mail trick.

Richard

+1 now now

 

[Hydrozoan]

...

You who seem to know so much about it please explain to me (with reference to the stock market) why the unfunded deferred pension liability could have moved as follows :

2015 £22.6m
2016 £80.5m
2017 £50.5m

I'm open to reasonable explanations.

I cannot speak to the RNLI figures specifically, but UK DB pension scheme deficits generally can be subject to very significant volatility. Here for example is a report which states that:

‘The PPF 7800 deficit was slashed in half last month as gilt yields rose. ...The combined defined benefit (DB) deficit decreased by £52.8bn over January to £51.0bn on a section 179 basis, according to the Pension Protection Fund's (PPF's) latest funding update.’

https://www.professionalpensions.co.../3026915/are-db-deficits-on-a-downward-spiral

If you want more explanation and detail, the PPF has published since 2007 its estimates of ‘... the latest estimated funding position, on a s179 basis, for the defined benefit schemes in its eligible universe’ and publishes the index on the second Tuesday of every month. Links to updates since January 2014 are available here:

http://www.pensionprotectionfund.org.uk/Pages/PPF7800.aspx

I also seem to recall reading recently that companies and actuaries have been using more up-to-date figures on life expectancy (it has not continued to increase, as it had hitherto, in recent years) in calculating scheme liabilities, and that may perhaps also make a difference when scheme liabilities are thoroughly reviewed (I think that may be done on a triennial basis?).

I have neither the time nor the inclination to look in more detail, and am not an accountant. But with the greatest respect to your own accountancy background, I suspect that current actuarial and pensions accounting expertise, with specific reference to UK DB schemes, is necessary to fully understand why such very large shifts in unfunded deferred pension liability occur – and not just in the RNLI by any means.

 

[robertj]

As one of the basic principles of accounting standards is to allow the comparability of different organizations there are NOT "many many different ways of expressing assets and liabilities".

Assets and liabilities are generated at historic cost. Judgements may then come into play with asset values for example in applying provisions for old stocks, bad and doubtful debts, or the period over which fixed assets should be depreciated.
MK

.

You would appear to confusing errors with different accounting principles. And when you say I have no idea how many ways there are, you are ignoring the fact that I have a lifetime in financial roles, including audit and perhaps could teach you a few. Like for example when I found 13 frauds one year when auditing a bank.



I don't accept that for one minute. When a major organization publishes a rebuttal to an attack by a major newspaper they darn well should be sure that the information is straightforward and clear and correct. IMHO the person who authorized this rebuttal is not at his place in the organization. I feel that the response was intended to divert attention from the pension liability - but then that is only IMHO.

I also understand John Morris' knee-jerk defense of the RNLI. I had occasion to see the same sort of reactions when having to announce to an employer that a trusted employee was defrauding his business. An immediate refusal to believe until you explain that the typical profile of a frauder is someone with at least 10 years seniority and holding a position of trust in the organization .

Crikey you not implying John Morris is the same type of character surely?

 

[RichardS]

Thank you. I will try to remember that more often before I engage in pointless exercises in trying to talk sensibly and rationally with some forumites. .

I thought that Sybarite was being rather erudite.

Richard

 

[jordanbasset]

I do not believe any large employer would not take action if hard core, graphic pornography were displayed in the work place, whether on mugs or posters. Even worse with the head of another employee superimposed on it. If anything I think they dealt with it too lightly initially by just asking those responsible to remove the offending mugs.
When that offer was refused they had no choice but to take action. Otherwise the woman who was the victim here would have an open and shut case for sexual harassment and the RNLI would be responsible ( as well as the employees concerned) for failing to take action, a claim which could have been very expensive for them
I suppose if that had happened the Daily Mail would headlines would be ' RNLI Perverts'

 

[Angele]

You who seem to know so much about it please explain to me (with reference to the stock market) why the unfunded deferred pension liability could have moved as follows :

2015 £22.6m
2016 £80.5m
2017 £50.5m

I'm open to reasonable explanations.

Sybarite, as I have no doubt you are aware, the liability of which you speak is the difference between two very large numbers - the assets of the fund less the present value of the scheme's liabilities. Unless a fund is pursuing a very conservative "liability matching" investment portfolio (and, from the description in the accounts, it appears that less than half of the RNLI's fund is "liability driven investments"/fixed interest) the two values do not necessarily move in line. In particular, recent years have seen dramatic falls in discount rates used to value pension fund liabilities in line with movements in Gilt yields. This leads to a significant increase in the value of pension fund liabilities when reported in a company's accounts in accordance with FRS102.

Anyhow, I don't think Grumpy_o_g needs to explain anything, as it is all clearly laid out in detail in Note 11 of the accounts. (Note 14 of the 2016 version). The scheme's assets have grown steadily from £277m in 2015, to £312m in 2016, to £330m in 2017. The present value of the fund's liabilities increased massively in 2016, before dropping slightly in 2017. That increase in 2016 has nothing to do with anything the RNLI has done, nor with anything about the benefits that the members will receive in due course - it is solely down to movements in the value of the discount rate used to present value the liabilities.

Even you can't blame the RNLI for plummeting Gilt yields.

Whilst I get, to a limited extent, your dissatisfaction with various elements of the RNLI's finances, your taking issue with its pension fund is a bit pointless. That scheme was closed to new members in 2007 and to future accrual from 2012. So, it is an historical "inheritance", in much the same way it is for most large organisations in the UK. It will continue to see large swings in the value of the net assets/liabilities for years - probably decades - to come. But none of that can be blamed on the current management.