# Effective Fiscal 2000

**Pension transactions**

The entries which follow illustrate accounting by an employer agency and an administrative agency for activity involving pension benefit transactions between the two entities.

**Note**:1) The entries illustrated in this case study are to address FASAB Liability Standard (#5).  This is not an authoritative guidance but an illustration of pension transactions using U.S. Standard General Ledger accounts.  This case study does not include all situations. 

2) One of the major revenue sources to the Civil Service Retirement and Disability Fund is from the general fund payment (appropriation) to the trust fund.  It is not illustrated in this scenario because the objective was to show how the agencies and OPM record the pension expense and the pension liability as they relate to each other.

**Assumptions**: 

1) The payroll and pension is paid out once a month to CSRS enrolled employees.  The employees contribute 7% and the employer agency makes a matching contribution of 7%.  Assume there is no other deduction in employees payroll except for the retirement contribution.   

2) These assumptions do not relfect current CSRS contribution and witholding rates.  See OPM Payroll Office letter +7-10 for guidance o future CSRS employer and employee rates.

3)   These example transactions do not reflect FERS transactions and therfore, do not present situations where the pension expense is less than the total employer and employee contributions.  See interpretation #4 to FASAB 5 for guidance.

EVENT DESCRIPTION

AGENCY   ENTRIES  (Appropriated Fd)

ADMINISTRATIVE   PLAN=S ENTRIES (OPM)

1) The entities record their funding.

*proprietary*

1010FBWT150,000

3100Unexp Appropriation150,000

*budgetary*

4119Other Appro Real150,000

4510Apportioned150,000

4510Apportioned150,000

4610Allotments150,000

*proprietary*

None

*budgetary*

None

2a) Assume the employer agency makes an accrual for retirement contributions and employee withholdings monthly.  Rather than showing this entry 11 times, the toal for 11 months is recorded in a single entry.

Assume the following:

each month the Payroll expense is 10,000

$700 - contributed by the agency for retirement 

$700 -contributed by the employees for retirement 

*proprietary*

6100NPayroll expense110,000

6400GBenefit expense*    7,700

**2210N Acc. funded payroll**102,300

(Employees payroll, net)

**2211NWithholding pay**    7,700

**2213GEmployer Contrib pay**    7,700

3100Unexp appropriation117,700

5700Appropriation used117,700

*budgetary*

4610Allotments117,700

4901Expended Auth - unpd117,700

*proprietary*

**1311NContribution receivable**7,700

**1311GContribution receivable**7,700

5400NBenefit revenue7,700

5400GBenefit revenue7,700

*budgetary*

None

2b) The agency pays its employees and makes a payment to the administrative agency.  

*proprietary*

**2210N Acc. funded payroll**102,300

(Employees payroll, net)

**2211NWithholding pay**    7,700

**2213GEmployer Contrib pay**     7,700

1010FBWT117,700

*budgetary*

4901Expended Auth - unpd117,700

4902Expended Auth - pd117,700

*proprietary*

1010FBWT15,400

**1311NContribution receivable**7,700

**1311GContribution receivable**7,700

*budgetary*

4114*Trust Fund receipts15,400

4620Other Fds Ava for Comm/Oblig15,400

3) Assume at the end of the 12th month, employees= salary, employees= withholdings, and agencies contributions were accrued. 

*proprietary*

6100NPayroll expense10,000

6400GBenefit exp     700

**2210N Acc. funded payroll**9,300

(Employees payroll, net)

**2211NWithholding pay**    700

**2213GEmployer Contrib pay**     700

3100Unexp appropriation10,700

5700Appropriation used10,700

*budgetary*

4610Allotments10,700

4901Expended Auth - unpd10,700

*proprietary*

**1311NContribution receivable**700

**1311GContribution receivable**700

5400NBenefit revenue700

5400GBenefit revenue700

*budgetary*

None

4) During the year retirement annuity benefit was paid to the retirees.

Note: reclassification from unfunded to funded accounts was done for Statement of Financing purpose. 

*proprietary*

None

*budgetary*

None

*proprietary*

**2610NActuarial Pension liab**10,000

1010FBWT10,000

6400NBenefit Expense*10,000

6800NFuture Funded expense10,000

*budgetary*

4620Other fds ava for comm/oblig10,000

4902Expended authority-pd10,000

5) At the end of the year accrual for annuity benefits payable to retirees is made.

*proprietary*

None

*budgetary*

None

*proprietary*

**2610NActuarial Pension liability**5,000

**2216N Pension benefits due and payable**5,000

6400NBenefit Expense*5,000

6800NFuture Funded Expense5,000

*budgetary*

4620Other fds ava for comm/oblig5,000

4901Expended authority-unpd5,000

6) At the end of the year, the unobligated balance was classified to receipts unavailable for obligations. 

*proprietary*

None

*budgetary*

None

*proprietary*

None

*budgetary*

4620Other fds ava for comm/oblig400

4389*Authority unavaliable400

7) At the year end, the agency records cost that will be covered by imputed financing.  Imputed financing is calculated to be $7,200.

Assume the cost factor is 20% of $120,000.  The cost of CSRS is $24,000 for the year. 

Both employer and the employee contributed 7%. $120,000 x .07 x 2 = 16,800

24,000 - 16,800 = 7,200

*proprietary*

6730Imputed cost7,200

5780Imputed Financing Source7,200

*budgetary*

None

*proprietary*

None

*budgetary*

None

8) At the end of the year actuary estimates the pension expense to be $26,000.  OPM used estimated payroll amount to $130,000 to calculate service cost.  

130,000 x .2 = 26,000

*proprietary*

None

*budgetary*

None

*proprietary*

6800**N**Future Funded Expense26,000

**2610NActuarial Pension liability**26,000

*budgetary*

None

**TRIAL BALANCE** - For Administrative Entity Only

ACCOUNTS

OPENING BALANCE

TRANSACTIONS

PRE-CLOSING TRIAL BALANCE

CLOSING ENTRIES

*Proprietary*

1010FBWT

**1311Contributions receivable**

**2216Pension Benefit payable**

**2610Actuarial Pension Liability**

3210Cumulative result

5400Benefits revenue

6400*Benefits expense

6800Future Funding expense

600,000

500,000

100,000

600,000600,000

5,400

1,400

  5,000

11,000

16,800

15,000

11,000

32,80032,800

605,400

    1,400

    5,000

511,000

100,000

  16,800

  15,000

  11,000  

632,800632,800

 9,200    

16,800

15,000

11,000

26,00026,000

*Budgetary*

4114*Trust fund receipts

4201Total actual resources

4389*Authority unavaliable

4620Other fds ava comm/oblig

4901Expended authority - unpd

4902Expended authority - pd

100,000

 100,000 

100,000100,000

15,400

    400

  5,000

10,000

15,40015,400

 15,400

100,000

      400

100,000

    5,000

  10,000

115,400115,400

15,400

  5,400

 10,000 

15,40015,400

CLOSING ENTRIES FOR OPM

*proprietary*

5400Benefit revenue16,800

3210Cumulative results16,800

3210Cumulative results26,000

6400Benefit expense15,000

6800Future funding expense11,000

*budgetary*

4201Total actual resources15,400

4114Trust fund receipts15,400

4902Expended authority - pd10,000

4201Total actual resources10,000

***Total Resources=Total Status***

4201=4389+4620+4901

105,400=400+100,000+5,000

STATEMENT OF CHANGE IN NET POSITION - Administering entity

1. Net Cost     9,200   

3. Net results of Operation    9,200

5. NetChange in Cumulative Results    9,200

7. Change in Net Position    9,200

8. Net Position  - Beginning of the Period100,000

9. Net Position - End of the Period109,200

STATEMENT OF NET COST - Administering entity

6400Benefits expense 15,000

6800Future Funding expense 11,000

5400Benefit Program revenue(16,800)

**Net Cost**   9,200   

STATEMENT OF FINANCING - Administering entity

**1A.  Obligations incurred**

4901Expended Authority - unpd  5,000

4902Expended Authority - pd10,000

**1B.  Offsetting receipts**

4114-4389(15,000)

**1F. Exchange revenue not in the entity=s budget**

1313NContribution receivable   (700)

**1313GContribution recievable**   (700)

4389Authority Unavaliable    (400)

   (1,800)

**4.  Financing Sources Yet to be Provided**

6800Future funded expenses11,000 

**Net Cost** 9,200

�	For more details,  see AEntries to record Pension cost, including pension cost covered by imputed financing@ scenario.

� OPM calculates its service cost using the estimated payroll amount by the actuarial cost factor.  The actual payroll amount is not available until later date.  Currently service cost calculated  by  agencies and OPM is  not reconciled and the difference is contributed  by the different payroll amount that used in the calculations.

� Unlike the other Federal funds, Federal receivables are not considered as a budget authority in the trust fund.   The trust receipt account only records cash, therefore recievables are not recognized as budget authority .  

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