Pensions – Defined Contribution Pension

Golden Gate has a defined contribution pension scheme that all employees are
enrolled into. However, in the year ended 30 June , it set up an additional fund
(Fund) as a way of enhancing post-retirement benefits. The terms of the Fund are as
follows:
• Employees with more than two years’ service will be automatically enrolled
into the Fund.
• Golden Gate’s contributions into the Fund are voluntary. In the year ended
30 April 2015, its contributions were equivalent to 1% of wages and salaries.
• Whilst the fund is in existence members will, upon retirement, receive an
annual lump sum based on their number of years of service.
• Golden Gate can cancel the Fund at any point. If cancelled, no further benefits
or compensation will be paid to members.

Previously, the national press have been critical of Golden Gate because of its low
levels of employee remuneration, which have generally increased below the level of
inflation. As a result, some believe that the announcement of the Fund is simply a
public relations exercise, and many employees remain sceptical about Golden Gate’s
commitment to it.

I am beyond confused… Any help on how this should be accounted for would be great…

Thanks