Using Pension Statuses

This chapter provides overviews of pension status codes and periodic processing for pension status codes and discusses how to:

• Define status criteria for active and terminated employees.

• Set up actuarial valuation.

• Produce Form 5500 participant counts.

Understanding Pension Status Codes

Pension status codes categorize participants based on pension-related information. Pension status codes are plan specific and effective-dated, enabling you to track an employee's changing status in a plan over time. These status codes are more than just informational. They are also the foundation for the actuarial valuation extract and the Form 5500 reporting.

Pension Administration maintains pension status codes in three ways:

The five deferred benefit statuses (TDF, RDF, DDF, BDF, and QDF) are grouped into two categories. Set these manually—or, in the case of TDF, using periodic processing—at the time that you create the payee records in preparation for the first pension payments. If payments are later suspended, the payment process reassigns the deferred benefit status.

At implementation time, you perform three tasks related to pension status codes:

• Set up criteria for the first group of status codes.

• Match all possible pension statuses to actuarial valuation categories.

• Choose how to report on employees based on their changing valuation categories over the year.

Understanding Periodic Processing for Pension Status Codes

Periodic processes are processes that you run on a regular basis to maintain your pension data. You can run periodic processes for all employees at once, for individual employees, or for employees that meet the criteria that you define in a custom statement. You can run periodic processes for one plan at a time or for all plans at once.

Pension Statuses is a periodic process that maintains the pension status codes. When you run this process, the system processes each employee whose current status is maintained through periodic processing (that is, an employee with an active or terminated status). The process evaluates each employee according to the status code definitions that you set up. Based on the results of this evaluation, a new status code is assigned. The effective date of the new status is the date of the periodic processing job.

If your status code definitions rely on calculated values, such as service, run the relevant calculation in the same periodic processing job that determines pension statuses. Otherwise, the needed values (in this case, service values) are not available.

It is important to run this process regularly—at least monthly—to keep the pension status codes current.

Note. Periodic processing updates status codes only for employees whose current status is one of the seven statuses handled through periodic processing. If an employee's current status indicates that the employee is dead, is in payment status, has finished receiving payments, or has a deferred benefit—except for status TDF (terminated, deferred benefit)—periodic processing does not change the status.

Defining Status Criteria for Active and Terminated Employees

To define status criteria for employees, use the Code Definition (STATUS_CODE_DEFINT) and Codes (STATUS_ASSIGNMENT) components.

This section provides an overview of pension status code usage with multiple jobs, lists pages used to define status criteria, and discuss how to:

• Create status code definitions.

• Assign a status code definition to a pension status code.

Understanding Pension Status Code Usage with Multiple Jobs

Multiple jobs processing adds an additional level of complexity to pension status code usage. A pension status is for an employee, rather than a job.

When you use multiple jobs processing for the pension status codes that are maintained by periodic processing and user-defined criteria (ANP, APR, AVS, ANS, A70, TNV, and TDF), you do not need to specify whether an employee is active or inactive in the criteria. This is because you define what constitutes an active participant on the Active/Inactive Job and Plan Aliases pages.

For these seven pension status codes, you designate the active and inactive status when you assign the codes to custom statements. The active statuses (ANP, APR, AVS, ANS, and A70) apply only to active employees (using the active definition that you set up on the Active/Inactive Job page). The inactive statuses, TNV and TDF, apply only to inactive employees.

Multiple jobs processing provides access to additional information for the service status. This enables you to determine whether a participant is in a period of service credit eligibility.

See Also

Setting Up Active and Inactive Job Definitions

Using Database Aliases with Multiple Jobs

Setting Up Service Function Results for Multiple Jobs

Pages Used to Define Status Criteria

Creating Status Code Definitions

Access the Code Definition page (Set Up HRMS, Product Related, Pension, Status Rules, Code Definition, Code Definition).

A status code definition contains an IF statement that identifies the criteria for inclusion in this category—for example, the criteria for identifying active employees.

You must first set up the status code definitions on this page. Then, on the Status Code Assignment page, you assign a definition to each pension status code (you can reuse definitions, if appropriate).

Note. Because the pension status codes determine how participants are categorized for Form 5500 participant counts, be sure that your definitions categorize participants appropriately for regulatory reporting.

You do not need to use all of the valid pension status codes, but make sure that all participants belong to only one of the categories that you use. The statement type is always Status Code Definition.

Statements

You can use IN clauses (that is, clauses with the keyword IN) to check for several different values for a single field. For example, you can determine whether the employee status has one of these values: active, leave, or leave with pay. When you use an IN clause, you assign a temporary variable to the result, as shown in this example:

You can set up as many IN clauses as necessary. Then, when you set up an IF statement, you check the temporary variables, as shown in this example:

This technique is useful when you check a large set of valid values. Because the IN statement uses an implied OR condition, it separates all of the OR clauses from the AND clauses of the final IF statement.

See Also

Using the Custom Statement Page

Assigning a Code Definition to a Pension Status Code

Access the Status Code Assignment page (Set Up HRMS, Product Related, Pension, Status Rules, Codes, Status Code Assignment).

You must create a status code assignment for each plan. You can reuse definitions, if appropriate.

Map real definitions only for the seven statuses that are set by periodic processing (A70, ANP, ANS, APR, AVS, TDF, and TNV).

Setting Up Actuarial Valuation

To set up actuarial valuation, use the Codes (STATUS_ASSIGNMENT) and Actuarial Valuation Matrix (VAL_MATRIX) components.

This section provides an overview of actuarial valuation setup and discusses how to:

• Map valuation categories to a participant's pension statuses.

• Specify how to treat combinations of valuation categories.

Understanding Actuarial Valuation Setup

A pension plan is subject to an annual actuarial valuation so that an actuary can determine plan liabilities. Pension Administration produces the Actuarial Valuation Extract with the data necessary for the valuation.

Note. The Actuarial Valuation Extract does not analyze the data or offer conclusions about the plan's liabilities. It simply presents the relevant data that a qualified actuary can use to perform the valuation.

The extract creates two data files:

• Active extract containing the data for those whose benefits are still accruing.

• Inactive extract containing the data for those whose benefits are no longer accruing and who have not yet been paid.

Current employees covered under a plan, whether or not they have begun to participate, are typically active. Employees who have separated from service, whether receiving benefits or awaiting deferred benefits, are typically inactive. Beneficiaries and QDRO alternate payees are also typically inactive.

An employee's valuation category indicates to the system whether the employee belongs in the active file, the inactive file, both files, or neither file. When you run the Actuarial Valuation Extract, the system populates a table with the employee's valuation category as of the extract date: Active, Inactive, Both, or Done.

The next time you run the extract, an employee's previous valuation category can impact whether the employee appears in the active or inactive valuation file. For example:

• An employee who was previously active but who is now done (for example, an employee who terminated at some point during the year with a small benefit cashout) appears in that year's active file.

• An employee whose status was done both last time and this time does not appear in either extract file.

An employee with no recorded prior year valuation category is automatically assigned a prior category of none to indicate that no record exists.

Events that most likely change an employee's valuation category are terminations and rehires. Rehired retirees and employees over age 70 1/2 who are receiving mandatory pension distributions are the most likely to have a valuation category of both.

For your implementation, you must determine which pension status codes to associate with which valuation categories. You must also determine which extract files include which employees, based on every possible combination of the prior and current years' valuation categories.

Pages Used to Set Up Actuarial Valuation

Mapping Valuation Categories to a Participant's Pension Statuses

Access the Valuation Category Assignment page (Set Up HRMS, Product Related, Pension, Status Rules, Codes, Valuation Category Assignment).

Pension Status

Insert a row for each of the system's 21 pension status codes.

Valuation Category

For each status, identify one of the following valuation categories: Active: Participants who still accrue benefits. Inactive: Participants who are no longer accruing benefits, but have not yet been completely paid. Both: Participants who fall into both the active and inactive categories—for example, a rehired retiree who is receiving pension payments and is also continuing to accrue additional benefits. Done: Participants who have received their entire benefit. The plan no longer owes them anything. No Record Exists: You do not assign this value; the system sets it as the prior-year valuation category when an employee appears in the system for the first time.

Specifying How to Treat Combinations of Valuation Categories

The Actuarial Valuation Extract uses a combination of the current and prior years' valuation categories to determine how to create the extract files. You use the Actuarial Valuation Matrix page to specify how the system should treat combinations of these valuation categories. The information that you set up on this page applies to all plans.

Access the Actuarial Valuation Matrix page (Set Up HRMS, Product Related, Pension, Status Rules, Actuarial Valuation Matrix, Actuarial Valuation Matrix).

Active Valuation Extract and Inactive Valuation Extract

For each combination of prior year and current year valuation categories, select: Active Valuation Extract to include participants with this combination of categories in the active extract file. Inactive Valuation Extract to include participants with this combination of categories in the inactive extract file. The delivered values appear by default, but be sure to conduct your own analysis. Note. You must scroll to review all of the possible combinations.

Producing Form 5500 Participant Counts

Pension status codes, along with vesting percentages, determine how participants are reported on Form 5500. Run periodic processing to update the pension status codes and vesting percentages before running the PASPC01 - Form 5500 Participant Count Report.

The following table indicates how status codes map to Form 5500 line numbers:

The following table indicates how the Form 5500 line numbers map to pension codes:

Participants who terminated or retired during the reporting year with a vested percentage of less than 100 might be counted twice. The second occurrence is on line (h). This is acceptable because this line item is not part of the total participant count; it warns the IRS of a possible partial plan termination.

You must perform the count for row (i) separately. This row contains participants who have pension status codes TDF, RBP, XDF, and DDF, who terminated in the current 5500 reporting year, and who have not been paid (either completely or in part) by the due date for filing Form 5500.

QDRO recipients who are not otherwise participants in their own right are not included.

Active participants who are older than 70 and are receiving payments are presumed to be 100 percent vested. In order to avoid counting them twice, they are counted as active (and not receiving payments) for 5500 reporting purposes.

See Also

PASPC01 - Form 5500 Participant Count