Setting Up Repayment Deductions

This chapter provides an overview of repayment deductions and discusses how to:

• Modify and update delivered repayment deductions.

• Create new repayment deductions.

Understanding Repayment Deductions

This section discusses:

• Delivered repayment deductions.

• Delivered supporting elements.

• User fields.

• Process lists and sections.

• Viewing delivered elements.

Delivered Repayment Deductions

In this table, the first column combines the name and description of the delivered repayment deductions for the U.S. The other columns indicate the calculation rule components, such as Unit, Rate, Percent, and Amount, and the pre-process and post-process formulas for each deduction.

Note. These deductions are defined as PS Delivered/Not Maintained. This means that you can use them as delivered, modify them, or replace them with new elements.

LOAN

The LOAN deduction has a calculation rule of Amount and is used to calculate regularly scheduled loan payments. Define the amount, the loan repayment schedule, and other information related to the loan at the payee level on the Request Repayments USA page.

LOAN AD PYMT

The LOAN AD PYMT deduction has a calculation rule of Amount and is for additional, one-time payments that a loan recipient may choose to make outside of the standard repayment schedule. Define the amount, the payment date, and other information related to the additional loan payment at the payee level on the Request Repayments USA page.

Note. The deduction LOAN AD PYMT is referred to as a non-payroll repayment. Although it is processed by the payroll system, it does not reduce the amount of net pay (it is not included in the standard gross to net calculation); instead, it directly reduces the repayment balance.

See Also

Setting Up General Deductions

Assigning Repayment Deductions

Delivered Supporting Elements

This table lists the key supporting elements used to define the delivered repayment deductions:

User Fields

Both LOAN and LOAN AD PYMT are defined with a single user field—LNS VR ID. This field ensures that each loan assigned to a payee is unique. Additionally, all LOAN-related accumulators have this variable as a user key.

See Also

Managing Multiple Resolutions of an Earning or Deduction

Process Lists and Sections

The LOAN and LOAN AD PYMT deductions are members of the LOANS process section.

The LOANS section is included in the USA STD PAYROLL process list.

Viewing Delivered Elements

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for the U.S. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll 9.1 PeopleBook.

See Also

Understanding How to View Delivered Elements

Modifying and Updating Delivered Repayment Deductions

This section provides an overview of deduction schedules and limit processing, and discusses how to:

• Modify deduction schedules.

• Update deduction limits.

Understanding Deduction Schedules and Limit Processing

This section discusses:

• Deduction schedules.

• Limit processing.

Deduction Schedules

The LOAN deduction is set up to be processed in every pay period, in the first segment only, using the generation control element GP APPLY 1ST SEG. You can use other delivered generation control elements, or create generation controls of your own, to limit processing of this deduction based on a range of criteria.

Note. The LOAN deduction is defined with a frequency option of Use Calendar Period Frequency. This means that the system views any amount you enter for a loan as a pay period amount.

The delivered generation controls are:

Note. These elements are discussed in detail in the chapter Setting Up General Deductions.

See Understanding Deduction Schedules.

Limit Processing

To define a loan, you must define and update the deduction limit, the per-period repayment amount, and any additional loan repayments.

Note. The deduction limit is equal to the original amount of the loan. It is stored in the variable LNS VR GOAL AMT.

To ensure that total loan repayments do not exceed the limit, the LOAN deduction uses the post-process formula LNS FM PYMTS.

This formula calculates the current amount of the deduction based on the termination status of the loan recipient:

1. If the loan recipient has a termination status of 1 (YES), the formula calculates the current amount of the loan as the goal amount (LNS VR GOAL AMT) less the amount paid to date (LOAN PAYMENT) less any outstanding arrears (LOAN ARR).

2. If the recipient's termination status is 0 (NO), the formula adds the current deduction amount (CURR AMT VAL) to the amount paid to date (LOAN PAYMENT) and any arrears amount (LOAN ARR), and compares this sum to the goal amount (LNS VR GOAL AMT).

   1. If this sum is less than the goal amount, no limits are applied and the loan is processed based on the current deduction schedule.

   2. If this sum is greater than the goal amount, the system calculates the current amount of the loan as the goal amount less the amount paid to date less the arrears payback.

For example, assume that a payee has a goal amount (LNS VR GOAL AMT) of 1000 USD, and that he has paid 900 USD (LOAN PAYMENT) towards the goal. Based on the current deduction schedule, the system deducts 200 USD each pay period. In addition, the payee has 50 USD in arrears.

When processing the deduction, the post-process formula:

1. Determines whether the payee has been terminated (NO).

2. Determines whether LOAN AMOUNT (900.00) + LOAN_ARR (50.00) + CURR AMT VAL (200.00) > LNS VR GOAL AMT (1,000.00) (YES).

3. Calculates the deductions as LNS VR GOAL AMT (1,000.00) − LOAN PAYMENT (900.00) − LOAN_ARR (50.00) = OVRD CURR AMT VAL (50.00).

The LOAN AD PYMT deduction uses the post-process formula LNS FM ADD PYMT to perform limit testing. However, instead of reducing the deduction if an unscheduled payment causes the goal amount to be exceeded, the formula generates a message warning that the payee has overpaid the loan.

See Also

Pre Process and Post Process Formulas

Pages Used to Modify and Update Delivered Repayment Deductions

Modifying Deduction Schedules

To modify deduction schedules:

1. Associate the appropriate generation control element with the LOAN deduction at the element level.

   For example, associate the delivered generation control GEN GC WEEK 1AND2 with the deduction (LOAN) on the Calculation page of the Deduction Definition component.

   Note. The LOAN AD PYMT deduction is for additional, unscheduled loan repayments. For this reason, you will likely not want to assign a generation control frequency to it.

2. Associate the calendar you are processing with the frequency factor of the generation control element you have selected.

   Do this on the Generation Control page of the Calendar component.

   For example, if you process payees weekly and have scheduled a loan to be deducted in the first and second week of each month (using the generation control element GEN GC WEEK 1AND2), associate the first and second calendar you process every month with the frequency factor FRST SCND. The generation control element triggers the deduction when the frequency factor associated with the calendar is identical to the frequency factor of the deduction.

See Also

Defining Generation Control Elements

Frequency and Generation Control Calculations

Using Calendars

Updating Deduction Limits

To update deduction limits:

1. Access the Request Repayments USA page.

2. Assign the repayment deduction to a payee.

3. Enter the total amount of the repayment in the Total Amount field.

   This amount represents the deduction limit.

See Also

Assigning Repayment Deductions

Creating New Repayment Deductions

This section provides overviews of accumulator structures and termination processing.

Understanding the Accumulator Structure of Repayment Deductions

If you create new deductions for calculating repayments, make sure that they conform to the accumulator structure that PeopleSoft Global Payroll for United States has defined for the delivered deductions. This is to ensure that the new elements are processed correctly and are included in the appropriate gross-to-net calculations.

Note. All of the delivered general deductions are after-tax deductions. As such, they contribute to the accumulator TOTAL DEDUCTION N that is subtracted from net pay. If you create a pre-tax deduction, you should add it to the SWT PRE TAX N and FWT PRE TAX N accumulators in addition to TOTAL DEDUCTION N. These accumulators reduce the amount of the taxable gross (GROSS).

Accumulator Structure of Repayment Deductions (LOAN)

This table describes the accumulator structure for repayments:

Accumulator Structure of Additional Repayments (LOAN AD PYMT)

Additional loan payments do not subtract from net pay by contributing to the accumulator TOTAL DEDUCTION N; instead, they contribute to the loan payment accumulator LOAN PAYMENT. This accumulator is subtracted from the total amount of the loan to calculate the loan balance (LNS VR BALANCE).

If you define additional nonpayroll repayments, make sure that they have the same accumulator structure as the delivered nonpayroll repayment deduction.

Understanding Termination Processing

The LOAN deduction references the formula LNS FM TERMINATION within the post-process formula LNS FM PAYMENTS to check the termination status of payees.

The formula LNS FM TERMINATION consists of the following conditions and actions:

If TERMINATION DT <= PERIOD END DATE And TERMINATION DT >= PERIOD BEGIN DATE Then
    1   >>  LNS FM TERMINATION
Else
    0   >>  LNS FM TERMINATION
Endif

If LNS FM TERMINATION returns a value of 1 (meaning the payee was terminated), the post-process formula calculates the current loan amount as the goal amount (LNS VR GOAL AMT) less the amount paid to date (LOAN PAYMENT) less any outstanding arrears (LOAN ARR). If LNS FM TERMINATION returns a value of 0 (meaning the payee was not terminated), then the amount of the pay period deduction is determined by the deduction schedule defined on the Request Repayments USA page (subject to the limit tests described earlier).

If you create new repayment elements, you can use the formula LNS FM TERMINATION to check the termination status of payees so that any remaining repayment balance is deducted from the final paycheck.

Note. In the formula LNS FM TERMINATION, the termination date is represented by the database system element TERMINATION DT. The pay period begin and end dates are represented by the system computed elements PERIOD BEGIN DATE and PERIOD END DATE, respectively.

See Also

Setting Up General Deductions

Pre Process and Post Process Formulas

Processing Final Payments