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