43 (Expressed in Trinidad and Tobago Dollars) NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS 30th June 2017 4 Summary of significant accounting policies (continued) j. Provisions Provisions for environmental restoration, restructuring costs and legal claims are recognised when: the NIBTT has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using pre- tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. k. Basis of allocation Contribution income and other income have been allocated to the various fund accounts on the basis set out in the Actuarial Review. (i) Contribution income Contribution income is allocated as follows: 2017 2016 % % Long-term benefits fund 89 89 Short-term benefits fund 6 6 Employment injury benefit fund 5 5 100 100 (ii) Other income Other income comprising investment income less expenses, penalty income and pension asset income is allocated to the benefit funds in the ratio of their opening fund balances. Investment expenses comprise direct staff costs and overhead expenses of the investments department and other direct expenses including mortgage management fees and provisions for diminution in value of investments. (iii) Fund ratios Based on the recommendations of the Eighth Actuarial Review and maintained in the Ninth Actuarial Review, NIBTT implemented the following: short-term benefit fund and employment injury benefit fund balances will be maintained at 2.0 times and 10 times the respective benefits incurred during the current year, the remaining excess of income over expenditure is to be allocated to the long-term benefit fund. These fund allocations are based solely on the ratios recommended by the independent actuary and do not represent NIBTT’s liability to beneficiaries at 30 June 2017.