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Pension adjustments |
See Also
Expense analysis | Pension spreading | Profit and loss account / Income statement (D schedule)
Select from the following headings:
Background | Developing the schedule | Completing the Schedule | Standard Sub-Schedules | Carry Forward | Related Errors
This schedule allows the user to deal with the new treatment of accounting for retirement benefits as set out in FRS 17.
One copy of this schedule may be developed from the D schedule. Alternatively, it is created automatically the first time that the Link pension adjustments option is used from the D schedule or from an Expense analysis schedule. By selecting the relevant row to link from, the amount entered is posted to a new row inserted on the Pension adjustments schedule.
General
All movements on the surplus/(deficit) in the fund are entered in the "Pension asset/(liability) in B/S" column. The charge/(credit) to the profit and loss account will usually be determined by these movements.
Surplus/(deficit) in fund, beginning of period
The user is required to enter the excess or deficiency of the pension scheme assets over the present value of the scheme liabilities where these have not been automatically entered by the File, Build new period function.
Movement in year? Current service cost
This is the increase in the present value of the benefits the employer is committed to provide in respect of employees service in the current period.
Movement in year? Past service costs
This is the increase in the present value of the benefits the employer is committed to provide in respect of employee service in earlier periods. This will arise where there has been an introduction, or improvements to, the retirement benefits.
Contributions
These are the contributions payable to the scheme for the period by the employer.
Contributions not allowed for tax puposes
These are the contributions payable to the scheme for the period by the employer, but not wholly and exclusively incurred for trade purposes, and as such not allowable.
Pension spreading
Contributions payable to the scheme after 6 April 2006 may be subject to spreading under FA 2004 s196?200.
The user should enter the pension contribution and develop the Pension Spreading schedule. This schedule calculates the relevant spreading and posts the deductions to the Pension schedule on inserted rows. On cessation of business, the tax relief may include amounts relieved or amounts carried back.
Other finance income
This comprises the aggregate of the expected return on pension scheme assets and interest on pension scheme liabilities. The total must be entered on the "Other finance income" row and can be itemised if desired on the respective rows in the "Net return" section.
Expected return on pension scheme assets
This is determined by applying the expected rate of return over the remaining life of the scheme to the market value of the scheme's assets as at the beginning of the period, adjusted by contributions received in the period and benefits paid in the period.
Interest on pension scheme liabilities
This is the increase in the present value of the scheme liabilities that arises in the period.
Components of actuarial gain/loss
The user should use this row to enter actuarial gains and losses that arise from a new valuation and the effect of differences in actuarial values arising from changes in actuarial assumptions made in earlier periods or where actual events have not been the same as were anticipated.
Other
Additional rows may be inserted as required to enter other movements. Rows which are not used will automatically be hidden.
Prior period contributions, now deductible
The user should enter here contributions recognised by the company for accounting purposes in an earlier period that have been paid in the current period of account.
Contributions deductible in later periods
The user should enter here contributions recognised by the company for accounting purposes that have not been paid until after the end of the period of account.
Total market value of assets
The user should enter here the fair value of the pension scheme assets, including current assets, at the balance sheet date.
Present value of scheme liabilities
The user should enter here the scheme liabilities calculated using the projected unit method.
Related deferred tax liability
Enter here the deferred tax associated with the surplus/(deficit) at the end of the period.
Actual return less expected annual return on pension scheme assets
FRS 17 requires this to be disclosed in the statement of total recognised gains and losses.
Experience gains & losses arising on scheme liabilities
FRS 17 requires this to be disclosed in the statement of total recognised gains and losses.
Changes in assumptions underlying the present value of scheme assets
FRS 17 requires this to be disclosed in the statement of total recognised gains and losses.
Investment companies
The investment company variant of the schedule is identical to the trading company version, except that the current tax relief is treated as an expense of management.From this schedule the user can develop multiple copies of Pension Spreading schedule, for each registered pension scheme.
On carry forward, the pension asset/(liability) and deferred tax relief brought forward are linked automatically to the values carried forward.
© 2009 Thomson Reuters.