Defining Benefit Eligibility

This chapter provides an overview of benefit eligibility and discusses how to:

• Use benefit eligibility results.

• Establish retirement types and eligibility conditions.

Understanding Benefit Eligibility

A pension plan typically defines a number of different retirement types: reduced and unreduced early retirement, normal retirement, and others, and a plan may have ancillary benefits for disability or death. Each of these benefits has its own eligibility requirements, often age and service requirements for retirement and proof of status for ancillary benefits.

There are two reasons to have a pension system determine the benefits for which an employee is eligible:

• The benefit type may impact the calculation of benefits.

  For example, if a death benefit provides 100 percent vesting and a benefit that is 50 percent of the normal retirement benefit, the system must know when it is calculating a death benefit.

• Calculation results are always tied to a single assumed benefit commencement date.

  You can use the benefit eligibility results to see what type of retirement is associated with that benefit commencement date.

  You set up a function result for each retirement or ancillary benefit that your plan includes. The benefit eligibility function evaluates the eligibility requirements.

Using Benefit Eligibility Results

You use benefit eligibility results primarily for reporting and for grouping logic. For example, if you set up a group containing only the employees eligible for early retirement, you can use this group when calculating early retirement factors or benefits.

You can use the same grouping strategy in other functions. For example, a death benefit offers different optional forms from an actual retirement, so the optional forms of payment function result consists of two definitions. The groups for those definitions check benefit eligibility to determine whether you are calculating a death benefit.

You can also use benefit eligibility results in the vesting function. The vesting pages provide a place to list any retirement types that trigger full vesting.

The calculation worksheet includes information about an employee's retirement type, and you'll probably want to include this information in your employee communications.

Making Retirement Types Mutually Exclusive

A benefit eligibility function result returns eligible or ineligible. An employee can be eligible for more than one benefit, for example normal retirement and early retirement.

If you want to ensure that employees are only eligible for one retirement type—for example, normal retirement but not early retirement—you must configure the definitions appropriately. In this case, the early retirement definition would include a condition requiring that the employee be ineligible for normal retirement. Such a condition, in turn, means that the system must evaluate normal retirement eligibility before evaluating early retirement eligibility. Thus, the normal retirement function result is placed before the early retirement function result in the job stream.

You can use the same principle to make several or all of the retirement types mutually exclusive. Pay close attention to dependencies so that the function results are in the right order in the job stream. Also, remember that when you enter the definitions, you have to set up the first benefit eligibility definition and function result before setting up the next benefit eligibility definition.

If you set up vested and unvested termination retirement types, you may want to keep them out of the mutually exclusive group. This way a terminated vested employee can be eligible for normal or early retirement benefits and still retain the terminated vested designation.

Understanding Benefit Eligibility Age Requirements

Benefit eligibility age requirements are typically based on an employee's age at benefit commencement date (BCD). That is, if a plan's normal retirement age is 65, a participant becomes eligible for normal retirement benefits at 65, regardless of when he separates from service.

For example, Jeremy and Kevin are twins working at your company. Jeremy terminates at age 40, while Kevin keeps working until he's 65. Both become eligible for normal retirement benefits on the same day.

If you use benefit eligibility in your grouping for other functions, you'll probably set up the benefit eligibility criteria based on BCD. For example, you have separate benefit formulas for early retirement, available at age 55, and normal retirement. Eligibility for early retirement is part of the group criteria for the early retirement benefit formula. If you base early retirement eligibility on the age at BCD, the system can calculate early retirement benefits for terminated vested employees who are at least 55 years old. If eligibility were based on the age at event date, you could never calculate early retirement benefits for someone who separated from service before reaching early retirement age.

If you do not use benefit eligibility as grouping criteria, you might choose to use the age at event date in determining eligibility. This way the calculation tells you the benefits for which an employee is eligible at the time of separation from service.

To set up the right definitions, you must decide what information you want from the benefit eligibility function. Also, remember that you can use different ages in different definitions.

Establishing Retirement Types and Eligibility Conditions

To establish retirement types and eligibility conditions, use the Benefit Eligibility (BENEFIT_ELIG) component.

This section provides an overview of retirement types and eligibility conditions, lists the page used to establish retirement types and eligibility conditions, and discusses how to:

• Establish benefit eligibility.

• Set other eligibility parameters.

Understanding Retirement Types and Eligibility Conditions

Your plans most likely provide for several types of retirement benefits (for example, early, normal, and late retirement) and ancillary benefits (for example, death and disability). The criteria you define—typically age and service for retirement benefits—determine whether employees are eligible for particular benefits. You set up these criteria on the Benefit Eligibility - Benefit Eligibility page.

Page Used to Establish Retirement Types and Eligibility Conditions

Establishing Benefit Eligibility

Access the Benefit Eligibility page (Set Up HRMS, Product Related, Pension, Components, Benefit Eligibility, Benefit Eligibility).

You'll see multiple definitions on this page. You can create additional definitions or add clauses to existing definitions. This is different from other functions, where you create additional definitions by accessing a component with the add action.

Note. If you want to see definitions in a particular order (for example, grouped by plan), create a naming standard so that the definitions appear on the page in alphabetical order.

Each definition consists of one or more eligibility clauses. To meet the eligibility requirements of a clause, an employee must meet all the criteria in that clause—that is, conditions within a row are connected with and. When a definition consists of multiple clauses, choose whether to connect the clauses with and or or logic.

See Also

Understanding Benefit Eligibility Age Requirements

Setting Other Eligibility Parameters

Benefit eligibility rules can contain a wide range of additional requirements. For example, eligibility rules for death benefits can check for the date of death field in the personal data record or look for a death action in an employee's job record. Furthermore, eligibility for a death benefit might depend on whether the employee was married at the time of death. The Custom Statement utility handles this type of logic.

A custom statement should consist of a Boolean statement. An employee who meets the conditions is deemed to meet the eligibility requirements. For example, if a special early retirement is available to those in Union 81, you might use a statement like this: If Union Code is equal to 81. (As with all group custom statements, the then portion is implied.)

See Also

Using Custom Statements and Spouse Eligibility Statements