Pension Fund

This records employer and employee pension contributions collected but not yet paid over to the pension provider. As a liability it normally carries a credit balance until the contribution is paid across.

Real-world examples

Retail and hospitality

A hospitality or retail business with a large casual and part-time workforce typically has a big share of staff earning below the threshold that triggers automatic pension enrolment, so only a minority of the team is automatically enrolled (though anyone can opt in even below it). The 2230 balance here tends to be modest relative to headcount and can shift noticeably as casual staff hours — and therefore earnings — fluctuate week to week.

Professional services

A professional services firm with mostly full-time, salaried staff above the earnings threshold usually has close to the whole team automatically enrolled, so the 2230 balance tracks much more closely with total payroll cost. A month's contributions of £3,200 employee plus £2,400 employer for a team of 12 is a credit of £5,600 to 2230, cleared once paid over to the pension provider — a far higher proportion of the wage bill flowing through this code than in a workforce with a lot of part-time staff.

Commonly confused with

Because code 2220 (Net Wages) sits right next to this one in Current Liabilities, it's a common mis-posting target. Code 2230 is specifically for pension fund, while 2220 covers net wages — similar in nature, but keeping them separate is what makes the current liabilities section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Pension Fund misstates what the business owes, and for a Current Liabilities code specifically it can distort the working capital and current ratio that lenders and suppliers look at when assessing short-term financial health.

Other codes in Current Liabilities