Pension Processing

Pension Processing – LGPS Requirements

 

Pension Maintenance

The References tab of Pensions has been extended to include three new fields:

  1. Rate Type – can be set to either Standard Rates or Contribution Bands. By default, all existing Pensions will be defined as Standard Rates. For this type of pension, the percentages are held at the employee level and only updated by direct entry. If the Rate Type is Contribution Bands, the user can set the system to define the percentages in a series of different manners as defined below.
  2. Band Method – can be set to either Fixed Update or Each Calculation. It is only available if the Rate Type is set to Contribution Bands. A setting of Fixed Update means that’s the percentages as help at the employee level are used. Those percentages are set either by use of the Pension Update wizard or through direct user entry. A setting of Calculation, means that the percentages are re-calculated each time a payroll calculation is carried out.
  3. Band Reference – can be set to either Pensionable PayWTE or Actual Salary. It is only available if the Rate Type is set to Contribution Bands. The settings define which value is used to determine the pension rate assigned to the employee.
    a) A setting of Pensionable Pay, means that the rate is based on the employee’s actual pensionable pay.
    b) A setting of WTE, means that the rate is based on the Full Time salary for the role that the employee is on, (i.e. Gross Pay/WTE Factor).
    c) A setting of Actual Salary, means that the rate is based on the employee’s actual salary.

 

The Values tab of Pensions has been extended to take in the Pension Band details.

If the Pension Rate Type has been set to Standard Rates, then only the Employee and Employer Values and Percentages can be entered.

If the Pension Rate Type has been set to Contribution Bands, then the Employee Value, Employer Value and Percentage can be entered, as can the Band information as supplied to you by the Pension advisor.

 

 

 

 

HR Record – Pension Maintenance

 

 

Pensions has been extended to include two new fields:

  1. Fixed – can hold the values Yes, No or Blank. It defines whether the Pensions Percentages can be overwritten by the Pension Update wizard.
    – If this field holds the values Blanks or No, then the values can be overwritten.
    – If the field holds the value Yes, then the value cannot be overwritten.
  2. Band Reference – can be set to either Pensionable Pay or WTE. It is only available if the Rate Type is set to Contribution Bands.
    – A setting of Pensionable Pay, means that the employee’s pension is based on the employee’s actual pensionable pay.
    – A setting of WTE, means that the employee’s pension is based on the Full Time Salary for the role that the employee is on (i.e. Gross Pay/WTE Factor). This field only needs to be entered in the Band Reference for this employee, differs from the Band Reference specified against this pension in Pension Maintenance.
  3. Employee Percentage – can be changed by the user, but if the Pension is of Rate Type Contribution Bands, and the Band Method is Each Calculation, the next run of the payroll calculation will once against override the percentage entered.

 

  • If a new pension record is created for an employee, the employee percentage rate can be defaulted depending on the settings for the Pension.
  • If the Pension is of type Standard Rate, then the percentages entered in PensionValue are defaulted in.
  • If the Pension is of type Contribution Bands and the Band Method is Each Calculation then there is no point in setting defaults.
  • If the Pension is of type Contribution Bands and the Band Method is Fixed Update, then the employee’s current salary is used to determine the percentage from the bands set against the Pension.

 

 

 

Pension Update Wizard

Payroll Functions Pension Rate Changes)

The Pension Update Wizard has been extended to include the processing needed to update the Employee Pension Percentages for Pension Schemes that have been defined as type Contribution Bands and Band Method Fixed Update.

This wizard does not allow Employee Pension Percentages to be updated for Pension Schemes with a Band Method of Each Calculation.

On the first page of the wizard, select the Pension Scheme to be updated from the drop-down list.

On the second screen, select the Values To Be Updated.

 

On the third screen, select the optional HR Query. The queries which are available for selection are those that are based on the HR Record and which are set as accessible by all users.

If the Pensions is of type Standard Rate, then this is the last page of the wizard.

Click Finish and confirm you wish to run the process.

 

If the Pension is of type Contribution Bands, then a further screen is displayed. This is used to define the value that is to be used to access the Pension Band table. The options are Salary (i.e. the employee’s current salary), or Previous Pensionable Pay (i.e. pensionable pay in past periods).

If Salary is selected, this is the last page of the wizard.

Select Finish and confirm you wish to run the process.

 

If Pensionable Pay is selected, then a further screen is displayed. This screen is used to define the periods for which the Pensionable Pay for the Pension Scheme being processed is be to accumulated, which will then be used to access the Pension Bands.

Select Finish and confirm you wish to run the process.

 

 

 

Processing Notes

  • If the Employee is not included in the optional Query, then no update is carried out for that employee.
  • If the Pension Percentages are set as fixed on HR Record > Pensions, then no update is carried out for that employee.
  • If the Pension is of type Standard Rates, then the Employee and Employer Values and Percentages are updated in HR Record > Pensions.
  • If the Pension is of type Contribution Rates, then the value used to check the bands must be obtained. If the wizard has specified to use the Employee’s Salary, then that is obtained. Otherwise, the Pension Records for the given scene and the given periods are found and the Pensionable Gross accumulated.
  • The Band Reference is then obtained either HR Record Pensions, or (Note: if that is blank), Pensions itself. If the Band Reference  is a WTE then the value to be used is divided by the employees WTE Factor, to give a Full Time value.
  • This value is used to find the correct percentage to apply to the employee from the bands defined against the Pension Scheme.

 

 

 

 

 

 

Payroll Calculation

If the Pension Scheme being processed is of Standard Rates, or is of type Contribution Bands with a Band Method of Fixed Update, then the Payroll Calculation will use the percentages or values as stored in HR Record Pensions.

If the Pension Scheme is of type Contribution Bands with a Band Method of Each Calculation, then the Payroll Calculation will calculate the Employee Percentage each time it is run for the employee.

Having determined that the Pension Percentage is to be calculated, the Band Reference is obtained either from HR Record Pensions or (Note: if that is blank) Pensions itself.

If the Band Reference is WTE, then the value to be used is the employee’s Current Salary divided by the employees WTE Factor, to give a Full Time salary.

If the Band Reference is Pensionable Pay, then the value to be used is the Gross Pensionable Pay for this pension scheme for this period, multiplied by 12.