FRS17 and Liabilities

Ygor

I understand under FRS17 rules, 'Contributions by scheme participants' are listed as a liability.

This seems odd to me. By having employees contribute to a scheme, this increases the liabilities of the pension scheme? How?
Employer contributions aren't included as a liability.
I can see how employee contributions increase the assets to offset liabilities but can't see how it increases the liabilities.

Are scheme liabilities being over estimated or am I worrying about nothing and the actuarial gains and losses for liabilities compensate for this particular liability?

I know I'm missing something obvious but I can't see what.

sandsy

Can you be more definitive as to where you read this?

Ygor

http://www.frc.org.uk/getattachment/f7ef214d-9347-48b0-b309-4ee3000db721/Amendment-to-FRS-17-Retirement-Benefits.aspx

Specifically the new para 77 that starts on page 8.

I was looking at the pension scheme of my local authority and thought it was their mistake but it appears to be in the actual FRS17 rules.

Charlton_Taz

The reason they are listed as part of the liabilities is that the scheme owes those contributions back to the employees i.e. you.

Ygor

Thanks, I thought they would be included in the current service cost.

I realise now that only covers the cost to employer after employee contributions have been taken off.