Most small companies pay into a defined contribution pension scheme for their staff and directors – including the workplace pension used for auto-enrolment. The company's only obligation is to pay its agreed contributions; the scheme's assets are held separately. This note describes those arrangements.
What this note shows
A short paragraph saying what kind of scheme the company operates, the pension cost charged for the year and, where relevant, any contributions unpaid at the year end. Small companies must disclose financial commitments not included in the balance sheet, and pension commitments are identified separately within that disclosure; a statement about the scheme is the usual way of dealing with this.
The note is part of FRS 102 Section 1A accounts. In FRS 105 micro-entity accounts, pension commitments are covered by the Guarantees and other financial commitments note.
Defined benefit (final salary) schemes need much fuller disclosures. If the company has one, take specialist advice and use the free text notes as needed.
Where the figures come from
This is a text note, so nothing is pulled in automatically. Take the figures from your records:
- Pension cost for the year – the pension costs account in the trial balance, which also appears in the operating profit note (£9,000 in the demo).
- Contributions outstanding – any pension contributions owed to the scheme at the year end, usually included within creditors.
Completing the note in Tax Optimiser
Open the period, choose View Accounts, then Notes in the left Actions menu. Select Pension commitments in the list.
- Set Show this note in the accounts to Yes.
- Click Use Template, choose the wording that fits and enter the figure when asked – or type your own.
- Click Save changes to save the note and rebuild the accounts preview.
The demo company used the Defined contribution scheme template with a pension charge of £9,000. You can combine both templates by applying one and then typing the extra sentence, since applying a template replaces the text in the box.
Wording templates
- Defined contribution scheme – describes the scheme as defined contribution, with assets held separately in an independently administered fund, and states the pension cost charge for the year. You are asked for {{PensionCharge}}.
- Contributions outstanding at year end – describes the defined contribution scheme and states the contributions payable and outstanding at the year end. You are asked for {{OutstandingAmount}}; the year-end date is filled in for you.
How it appears in the accounts
The note prints its heading and the paragraph as plain text.
Frequently asked questions
Do I need a pension note if the company only has an auto-enrolment workplace pension?
A workplace pension is a defined contribution scheme, and the usual approach is to state that and give the cost for the year. The "Defined contribution scheme" template provides the wording.
Where do I find the pension cost for the year?
In the pension costs account in your trial balance. It is also shown in the operating profit note, so the two should agree.
Should director pension contributions be included?
Yes. Contributions the company pays for directors into a defined contribution scheme are part of the company's pension cost.
What if contributions were unpaid at the year end?
Use the "Contributions outstanding at year end" template to state the amount. The unpaid amount should also be in creditors in the trial balance.