Illustration of pension funds, Financial Accounting

Illustration of Pension Funds

The following is the trial balance of Civil Servants Pension Fund as at 31 March 2005:

 

 

Sh 000

Sh 000

Accumulated fund as at 1 April 2004

 

3,245

Land and buildings in the Central business district

2,000

 

Pensions

390

 

Income from fixed return securities

 

580

11% Treasury Stock

400

 

Freehold Property (Developed with rental income housing units)

2,200

 

Employers normal contribution

 

980

Employees additional voluntary contributions

 

200

Administration  expenses

150

 

Claims received on tem insurance policies

 

21

Premiums paid on term insurance policies

49

 

Term insurance policies

400

 

Employers additional contributions

 

25

Employers normal contributions

 

300

Unpaid benefits

 

30

Group transfers in from other schemes

 

75

Individual transfers out to other schemes

5

 

Debtors on investment transactions

16

 

Commutation of pensions and lump sum retirement benefits

15

 

Dividends received from equity investments

 

400

20,000 ordinary shares in Flamingo Airways

200

 

Individual transfers in from other schemes

 

14

Income from unit trusts

 

70

Rental income from property

 

45

Group transfers out to other schemes

40

 

Cash and demand deposits

35

 

Tax paid on fund income

460

 

Ksh.250, 000 loan stock in KVM           

200

 

Death benefits paid      

15

 

Creditors for investment transactions

 

22

Refund of contributions

28

 

Investment in unit trusts

350

 

Loan from HFCK to develop Property

 

1,000

Contributions due within 30 days          

56

 

Shares in Moyalematt Ltd 2.00

 

2

 

7,009

7,009

 

 

Notes:

The fund owned 12,000 shares in Moyalematt, which were initially purchased for Shs.14, 000.  These have been disposed of during the year.  The only entries made in the books were in a debtor account and investment account since the shares are yet to be paid for.

The trustees felt the need to reflect the following market prices in the financial statements:

Loan stock in KVM – Market price index – 84.00

Shares in Flamingo Airways -Sh.9.75 per share.

 

Required:

(a) Statement of changes in net assets for the year to 31 October 2005.

(b) Statement of net assets as at 31 October 2005.                                   

                                                                                                                        (20 Marks)

 

Note:   This should be in compliance with IAS 26 – Accounting and reporting by retirement benefit plans.

 

 Solution

Civil Servants Pension Fund

Statement of changes in net assets for the year to 31 October 2005

                                                                        Sh. ‘000’                                   Sh. ‘000’

Contributions received:

            From employees: Normal                      980

            From employers: Additional                     25

                                                                                                                        1005

            From employees: Normal                      300

            From employers: Additional voluntary    200                                             500

 

Transfers in:

            Group transfers in from other schemes  75

            Individual transfers in from other

Schemes                                               14                                                89

 

Investment income:

            Income from fixed interest securities       580

            Dividends from equities                         400

            Income from unit trusts                           70                                                      

            Rents from properties                              45                                           1095

 

Other income: Claim on term insurance policies                                                      21

                                                                                                                        2710

Benefits payable:

            Pensions                                               (390)

            Commutation of pensions and lump sum

            retirement benefits                                 (15)     

            Death benefits                                       (15)

Payments to and on a/c of leavers:

            Refund of contributions                         (28)

            Group transfers out to other schemes    (40)

            Individual transfers out to other schemes               (5)

                                                                                                                         (493)

                                                                                                                         2217

Profit on investment disposals                              2

Changes in market values of investments:

            Loan stock in KVM                                 10

            Shares in Flamingo Airways                       (5)    

 

Payments: Premiums on term insurance policies    (49)

             : Admin expenses                                 (150)

                                                                                                                        (199)

                                                                                                                        2025

Taxation on income                                                                                           (460)

Net change for the year                                                                                      1565                            

 

Civil Servants Pension Fund

Statement of Net Assets as at 31 October 2005

 

                                                                                    Sh. ‘000’                       Sh. ‘000’          

Investment Assets

            Fixed interest securities: 11% T.Stock                     400

                                              : KVM loan stock                           210                          

                                                                                                                          610

            Equity investments: Flamingo Airways shares                                            195

            Unit trust investments                                                                              350

            Property: Freehold                                                                                 2200

            Cash and demand deposits                                                                        35

            Insurance policies                                                                                    400

            Debtors on investment transactions                      16

            Creditors for investment transactions                   ( 22)

                                                                                                                            (6)

                                                                                                                        3784    

 

Fixed Assets

            Leasehold property in Nairobi CBD                                                       2000

                                                                                                                        5784

 

            Long term borrowings

                        HFCK Loan                                                                             (1000)

                                                                                                                          4784

 

Current Assets:

Contributions due within 30 days                                                     56

Current Liabilities

Unpaid benefits                                                                   (30)

                                                                                                                            26

Net Assets                                                                                                          4810

 

Accumulated Fund at 1 Nov.2000                                                                         3245

Net new money invested per revenue a/c

including changes in market value of

investments                                                                                                       1565

Accumulated Fund at 31 October 2001                                                               4810

 

Posted Date: 12/15/2012 1:15:01 AM | Location : United States







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