Understanding Proration Factor Calculations

Terms and Elements

These terms are important for understanding proration calculation.

Basic Proration Factor Calculation Process

To calculate the proration factor:

1. Select Calculate Proration on the Plan Business Rules page.

2. Set up proration-related control tables.

   • Set up workday rules on the Workday Schedule page (for the workday schedule calculation method).

   • Set up proration percentage rules on the Percentage Proration Rules page (for the proration percentage calculation method).

   • Set up proration periods on the Prorate Periods page (for all prorated plans).

3. Define the begin and end dates of the eligibility evaluation period on the Determine Eligibility run control page.

4. Run the process to calculate eligibility based on whether the worker is eligible as of the end date of each of the proration periods evaluated.

   Each time you run the process, it calculates the cumulative eligibility proration factor for each member from the begin date of the plan payout period through the eligibility evaluation end date.

   The system displays the proration factor on the Eligible Employees by Plan or Eligible Employees by Group pages and on the Award Details section of the Allocate Awards page.

Setting Up Prorate Periods

You set up the prorate periods on the Prorate Periods page. Select Calendar Days, Weekly, or Monthly as the proration frequency (length of the proration period).

The system defines the end dates of proration periods for the payout period based on the daily, weekly, or monthly frequency parameters.

Setting Up Prorate Periods

You set up the prorate periods on the Prorate Periods page.

Select Calendar Days, Weekly, or Monthly as the proration frequency (length of the proration period).

The system defines the end dates of proration periods for the payout period based on the daily, weekly, or monthly frequency parameters.

Example of Monthly Calculation

This table describes the three proration periods in the example of monthly frequency with the end of the month as the period end date:

The process evaluates eligibility for each of the three proration periods of the evaluation period. Workers who are eligible on the proration period end dates are eligible for the month.

The process credits qualifying members with a proration factor of 1/3 for each proration period for which they were eligible.

A member who was eligible in all three proration periods would receive a proration factor of one (3/3).

Setting Up Workday Schedule Calculation

To set up workday schedule calculation:

1. Set up workday rules on the Workday Schedule page.

   • Create schedules assigning a factor to each day of the week (Sunday through Saturday).

   • Each day in the period has a proration factor equal to that day's factor over the total of the factors for the period.

2. Set up the prorate periods on the Prorate Periods page.

   • Select By Workday as the proration frequency. This is a daily frequency, so the system creates a prorate period end date for each day in the payout period.

   • Select a Workday Rule to assign factors to each day in the payout period. This Workday Rule is assigned to all members of the plan for the duration of the payout period.

Goal Weight × Performance Level of the Attainment Value

Example

Workday Schedule Definition:

Based on this schedule, the total factor was 23.5 in January 2000.

The proration factor attributed to a member for any eligible day in January 2000 is that day's factor on the workday schedule over 23.5. In this example, the proration factor for a Saturday is 0.5/23.5; the proration factor for a Tuesday is 1/23.5.

The worker's proration factor for the entire payout period is the accumulated sum of the daily proration factors for eligible days in the period. The maximum, for a worker who is eligible on every day in the period, is 23.5/23.5, or 1.

Setting Up Proration Percentage Calculation

To set up proration percentage calculation:

1. Set up proration percentage rules on the Percentage Proration Rules page.

2. For each prorate % ID, create separate proration rate schedules for workers who are active and those terminated at the end of the payout period.

3. For each proration rate schedule, define ranges of eligible days and associate a percentage with each range.

4. Set up prorate periods on the Prorate Periods page.

   • Select Calendar Days as the proration frequency. This is a daily frequency, so the system creates a prorate period end date for each day in the payout period.

   • Select a prorate % ID to associate proration rates schedules with the plan for the payout period.

Example

Proration Rates schedule:

Sample of proration factors: