In most countries, deductions for savings and retirement receive favorable tax treatment and special rules apply. You set up these deductions within the appropriate element classification, such as Pre-tax or Voluntary Deductions.
In some localizations, you can use a template to generate all the components you require for your pension or savings schemes, such as elements, balances, and formulas. There are predefined pension extract definitions to assist you to extract the data you may require to send to third parties. You can run these predefined extracts or use them as a model for designing your own.
For Hungarian users:
In Hungary, use Oracle HRMS to set up pension schemes available for your employees. By setting up pension providers as external organizations you collect employee and employer contributions and allocate the money to a particular pension. You can also specify payment to the provider should be made through a third party.
You can set up as many pension schemes as required within the following categories - Private Pension Fund, Voluntary Pension Fund, and Supplementary Health Care Fund. Both employees and employers can contribute either a percentage of pay or a flat rate amount to each of these funds, depending on the scheme rules. Employees and employers can also choose to make additional voluntary contributions, up to a maximum of 10% towards these funds. You can override the default contribution values at the assignment level.
For Irish users:
Use Oracle HRMS to set up pension schemes available for your employees. You can set up pension providers as external organizations to collect employee and employer contributions and allocate the money to a particular pension. You can set up as many pension schemes as required within the following categories – Retirement Benefit Scheme, Retirement Benefit Scheme Additional Voluntary Contribution, Personal Retirement Savings Account, Personal Retirement Savings Account Additional Voluntary Contribution, and Retirement Annuity Contract. Both employees and employers can contribute either a percentage of pay or a flat rate amount to these funds, depending on the scheme rules.
For UK users:
In the UK education sector, you can use predefined system extract definitions to create the reports required by the Teachers Pension Agency in England and Wales. Similarly, in the local government sector, you can use predefined system extract definitions to create files for transfer to Lynx Heywood pension administration systems (Class CPX and AXIS).
For US Users:
In the US you can generate all the elements, balances, and formulas you require to process deferred compensation plans and tax-sheltered annuities. For each plan you specify whether employees can make after-tax contributions as well as pre-tax deductions. You also specify whether employees can make Catch-up contributions (to continue contributing when they have reached the base plan contribution limit).
You can also set up State Retirement System plans, by initiating deductions in the categories "Defined Benefit Plan" or "Defined Contribution Plan".
You can use predefined system extract definitions to report on retirement plans and contributions to deferred compensation plans and tax-sheltered annuities (401K, 403b and 457 plans). You can also make copies of the seeded pension extracts and modify them to add your own data elements and layout as required by each of the pension providers.
For Netherlands Users:
In the Netherlands use Oracle HRMS to set up the pension and savings schemes available to your employees. For employees in the government and education sectors, you can set up pension schemes offered by ABP (Algemeen Burgerlijk Pensioenfonds).
A pension provider is an organization that collects contributions provided by employees to their employer and then allocates the money to a particular pension or savings scheme. In Oracle HRMS you can assign as many pension types as you require to each pension provider, then select these for your employer organizations. The pension type defines how contributions are calculated, and this information is datetracked.
Oracle HRMS supplies a predefined report to extract the data required for the monthly notification on ABP pensions. You could also use or adapt predefined global pension extracts to report on other pensions and savings data, as required. By default the NL HRMS Reports & Process request set does not include the global extract processes, but you can add them.
You select options on the Pensions page to determine the sort of pension scheme you require, such as whether it is an private pension scheme or a voluntary scheme, how contributions are calculated (percentage or flat rate), and whether an employer contributes to the pension. When you save the scheme, the application generates the payroll components you require. You can configure these in the forms interface, if you require. Once you link the elements, you can enroll employees in the scheme.
You use the default organization hierarchy to specify which pension types are available to employees in each organization. Employees participate in pension types specified for their own organization and any parent organizations within the hierarchy right up to the business group. You can also specify additional pension types for individual employee assignments.
For other pension and savings schemes, you assign pension providers and types to your employer organizations within your default organization hierarchy. Employees can select from the providers and types that are valid for their organization. Pension types specified for a child organization override any entries further up the hierarchy.
For all schemes, you can also set up eligibility criteria using eligibility profiles or element links. If you set up pension or savings plans, you use eligibility profiles to control who can enroll in the plan.
You can specify minimum and maximum ages for a pension type. An employee's age is checked against these limits by a formula during each payroll run.
You can define extract criteria to determine which people to include in the extract file, and a layout definition to determine which data to extract and how to format the records in the extract file. Oracle HRMS supplies a global pensions extract definition, which you can use or adapt to meet your requirements.
In Oracle HRMS, you can set up pension schemes within the following categories:
Retirement Benefit Scheme (RBS)
Retirement Benefit Schemes Additional Voluntary Contribution (RBS AVC)
Personal Retirement Savings Account (PRSA)
Personal Retirement Savings Account Additional Voluntary Contribution (PRSA AVC)
Retirement Annuity Contracts (RAC)
The pension deductions are pre tax and pre Pay Related Social Insurance (PRSI) and are subject to contribution limits expressed as a percentage of pensionable pay. These limits are dependent on an employee's age Oracle also enables reporting the number of employees participating in each scheme and the total amount of employee and/or employer contributions within the P35 Reports.
This section briefly describes each of the categories listed above.
Employees contribute towards a retirement benefit scheme and receive tax benefits. Employees and employers contribute either a percentage or a flat rate amount to this fund.
Employees can contribute additionally to a RBS. These additional contributions must be associated with the RBS scheme the employee contributes towards. These schemes depend on an employee's age. The maximum lump sum amount and pension amount are according to the scheme rules.
Employees can join a Personal Retirement Savings Account and the contributions paid to PRSA benefit from tax relief at an individual's marginal income tax rate. Employees also receive a Pay Related Social Insurance (PRSI) relief. The maximum annual tax-deductible contributions are based on a percentage of the individual's net relevant earnings. Employees and employers contribute either a percentage or a flat rate amount to this fund. The employer contribution is taxable as a benefit in kind. The maximum contribution rate (as a percentage of total pay) on which an employee can receive tax relief depends on an employee's age.
Employees can also make additional voluntary contributions to a PRSA and receive tax benefits. The maximum contribution rate (as a percentage of total pay) on which an employee can receive tax relief depends on an employee's age.
Employees can join the Retirement Annuity Contract by contributing a fixed amount as approved by the Revenue. Employees are eligible for tax benefits on their contributions. The contributions which are over the limits set out in a tax year can be carried forward and allowed, subject to the overall annual limits, in following years. If an employer pays contributions to an RAC, employees are taxed on these as a benefit in kind.
Oracle enables you to set up pension providers, which are external organizations that collect the contributions provided by employees and allocate the money to a particular pension. For each provider, you specify a name, location, and the pension types it offers. Use the Pension page to create a pension provider. The application automatically attaches the Pension Provider organization classification to the pension provider.
In Oracle HRMS, you can set up as many pension types as you require, within the categories described above. For each pension type, you can enter values for contribution rates.
Oracle Payroll automatically creates the elements, input values, balances, formulas, and formula results required to process pension contributions.
Contributions are either a fixed rate or a percentage of pay, depending on the scheme rules. You can override the contributions at the assignment level. Employees and employers can choose to make additional voluntary contributions to the Retirement Benefit Schemes and Pay Related Savings Agreement which are taxable.
Follow these steps if you want to set up pension schemes, enroll employees in the relevant schemes, and process contributions in the payroll run. Use the Pension pages to create pension schemes and types.
UK only: If you are setting up an occupational pension scheme, ensure you have recorded the employer's contracted out number (ECON) in the Tax Details References window for the business group. See: Business Groups: Entering Tax Details, Oracle HRMS Enterprise and Workforce Management Guide
Create a location for each pension provider. See: Setting Up Locations
Enter your pension types. Choose the Pensions option in the Navigator then click on the Pension Types tab.
Enter your pension providers and assign pension types to the providers. Choose the Pensions option in the Navigator then click on the Pension Providers tab.
Important: Use the Pension pages - not the Organization window - to create pension providers, and assign pension types to each provider. The pages provide the required validation.
Generate the payroll objects required for your pension schemes. Choose the Pensions option in the Navigator then click on the Schemes tab.
Link the generated elements. The names of all generated elements begin with the scheme prefix you entered on the Schemes tab.
See: Defining Element Links, Oracle HRMS Compensation and Benefits Management Guide
Review the generated formula(s). Formula names begin with the scheme prefix you entered on the Schemes tab. You can configure the formula(s) and the generated formula(s) result rules, if required.
If you have set up the pension provider as a Payee organization, create a third party organizational payment method, enter it as a valid payment method against your payrolls, and select it as a personal payment method for your employees. In the Personal Payment Method window, you select the pension provider as the Payee for this payment method. See: Entering Payment Methods for an Employee Assignment, Oracle HRMS Workforce Sourcing, Deployment, and Talent Management Guide
If you are using element link criteria to establish eligibility for pension schemes, your setup is complete and you are ready to enroll employees using BEE or the Element Entries window.
UK only: If you are using eligibility profiles to establish eligibility, you must set up a pension plan, and related items, following the usual procedures for Standard and Advanced Benefits.
Ireland only:Before you use your Pension elements and run the Payroll, ensure you specify the balance feeds for the IE Pensionable Pay seeded balance.
You enroll employees in pension schemes by entering the appropriate elements as element entries.
Use the Element Entries window (or Batch Element Entry).
To enroll a person in pension scheme
Set your effective date to the day when the person's enrollment in the scheme should begin.
In the Element Name field, select the element for this pension scheme, <base name> Pension Deduction.
Choose the Entry Values button to open the Entry Values window.
Enter a percentage or amount. For a percentage-based scheme or a flat amount scheme, if you do not enter any value, then the application considers the value entered while creating the pension type.
Save your work.
To enable employer contributions to a scheme:
Set your effective date to the day when the person's enrollment in the scheme should begin.
In the Element Name field, select the employer contribution element for this pension scheme, <base name> ER Contribution.
Enter a percentage or a flat amount depending on the type of contribution. For a percentage-based scheme or a flat amount scheme, if you do not enter any value, then the application considers the value entered while creating the pension type.
Save your work.
To enable employee contributions:
Set your effective date to the day when the person's enrollment in the scheme should begin.
In the Element Name field, select the employee's taxable contribution element, <base name> EE Taxable Contribution.
Save your work.