Setting Up Earnings Consolidations

Period

The consolidation process produces periodic earnings totals to provide a period-by-period earnings history. Enter the appropriate period, selecting from the following options: Calendar Month, Calendar Year, Plan Year, Employee's Anniversary Year, and Other Year.

If you select Other Year, specify the start month and start day of that year. Use a number (1-12) to represent the month. The day is usually the first of the month.

Depending on the function that uses this definition, there are certain restrictions:

• Earnings used by the final average earnings function can use any accumulation period.

• Earnings used by the cash balance accounts function must use the same accumulation period as the cash balance accounts definition.

  Valid values include Calendar Month, Calendar Year, and Plan Year.

• Earnings used by the consolidated hours function must use the same accumulation period as the consolidated hours definition, which must, in turn, use the same accumulation period as the corresponding service definition.

  Valid values include Calendar Month, Calendar Year, Plan Year, and Anniversary Year.

• Earnings used by the social security function must use a calendar year consolidation.

Accumulate Based On

If you base earnings on either of the following, your earnings data is already aligned with your consolidation period: Earnings Balance Table or Payroll W2 Accumulator (you select these options in the Earnings Based On field, described below). If you base earnings on compensation rate, there are no earnings periods to align. In these cases, you can ignore the Accumulate Based On group box.

If you base earnings on pay period data, you need to align your payroll dates with your consolidation dates. Specify the period into which earnings fall by selecting an Accumulate Based On option:

• Earned Date: Select this option to put earnings into the period containing the day that the money was earned. Because payroll data does not include an earnings-by-day breakdown, total earnings for the pay period are divided evenly among days to produce daily earnings amounts. For example, a weekly pay period from June 26 to July 2 includes pay from both June and July. If you consolidate monthly, 5/7 of the earnings falls in June and 2/7 falls into July. Proration by day always includes all days in the accumulation period, not just work days.

• Payroll End Date: Select this option to put earnings into the period containing the last day of the pay period.

• Pay Check Date: Select this option to put earnings into the period containing the date printed on the check.

Earnings Based On

In the Earnings Based On group box, choose one of the following types:

• Payroll W2 Accumulator: If you select this option, Pension Administration gets the data from the appropriate payroll table. As long as you allocate earnings based on Earned Date, the system prorates these amounts to find earnings for the consolidation period.

• Payroll Earnings Only: Select this value to allocate earnings based on the Pay Check Date.

• Compensation Rate Only: If you select this value, you complete the Compensation Rate Effective On parameters on this page. All of the other options are payroll-based and require you to complete the Payroll Earnings parameters.

• Both Payroll Earns and Rate (both payroll earnings and compensation rate): If you select this option, you complete both the payroll and earnings parameters and the system adds the earnings data (as specified in the Payroll Earnings group box) with the compensation data (as specified in the Compensation Rate Effective On group box). This means that you have to set up the blend proportions using the Pct of Earnings and Multiply Comp Rate By fields. For example, for a 50/50 mix, you would set up the definition to take 50 percent of earnings and to multiply the compensation rate by .5.

• Payroll Special Accumulator: If you select this option, use the Special Accum field to indicate which payroll accumulator holds the pensionable earnings.

• Earnings Balance Table: If you select this option, you access earnings that have already been subtotaled to produce month-, quarter-, and year-to-date balances. As long as you allocate earnings based on Earned Date, the system prorates these amounts to find earnings for the consolidation period. The results are the same as if you choose Payroll Earnings Only and allocate earnings based on the Pay Check Date. However, the payroll system has already done much of the work for you. Therefore, if your consolidation period is a month or a calendar year, it is more efficient to use earnings balance tables.

Payroll Earnings

If your consolidated earnings use any of the payroll-based earnings types, use the Payroll Earnings group box to specify the earnings or balance types to use:

• Including: Select this option to list the types to include.

• Total Bal/Pay Minus: Select this option to list the types to exclude.

Build the list of earnings or balance types in the scrolling region of the Earnings Based On group box.

Bal/Earn Code

Specify a code for the plan you select.

Pct of Earnings

For each Bal/Earn Code you specify, you can adjust the earnings by a specified percentage. For example, you can use 100 percent of regular earnings and 50 percent of overtime earnings. If you exclude earnings, you can exclude 50 percent of overtime earnings.

Accumulation Limit Amount

You can limit the amount of earnings for an earnings code by entering the limit here.

Do not use this field to implement 401(a)(17) limits. Set up those limits on a separate 401(a)(17) Parameters Page, and apply them in the Final Average Earnings or Cash Balance Accounts function.

Actual Rates

If you select this option, each compensation rate in effect during a period is prorated for the portion of the period it was effective. All these prorated rates are added to calculate the earnings for the period. For example, if Lewis's annual rate is 40,000 USD on January 1 and 44,000 USD starting April 1, the system takes three months at the first rate (10,000 USD) and nine months at the second rate (33,000 USD), for a final amount of 43,000 USD.

Round Method

You can round the effective dates of rate changes by specifying a round method, which you define.

Current Period and Prior Period

Select an option: Current Period to check the compensation rate during the current period or Prior Period to check it during the prior period.

Month

Enter the month that the compensation rate becomes effective.

Day

Enter the day that the compensation rate becomes effective.

Multiply By

Especially if you incorporate rates from multiple dates, you need to indicate how to weigh each rate. Enter a factor for each rate in the Multiplied By field. For example, you could use half of an employee's January 1 rate and half of the employee's July 1 rate. You can set up a factor as a constant value or an alias that you create. If you leave this field blank, the system uses a factor of 1.0.

Minimum Earnings

To limit the total earnings per period, enter a minimum earnings amount.

Maximum Earnings

To limit the total earnings per period, enter a maximum earnings amount.

Plus Additional Amount

If you want to add earnings to the period total (subject to a maximum that you set), enter that amount in the Plus Additional Amount field. To subtract earnings, enter a negative number in this field. You can set up all of these fields as either constants or aliases that you create.

Category

Enter each category of action and reason codes for which you ignore earnings. Use the categories you set up on the Job Event Categories page.

The system does not credit an employee with earnings until the next relevant action and reason event in the employee's job record—in this case, a return from leave. However, the system only recognizes this action as "relevant" if you reference it elsewhere in the consolidated earnings definition.

To ensure that the system recognizes the return from leave action (and thus stops excluding earnings), include that action in the Include Category on the Consolidate Earnings - Earnings Adjustments page.

Action/Reasons for Generation

You use the fields in this group box to generate earnings based on employee status or other criteria.

Category

You can generate earnings based on employee status or on other criteria. Use the Category field to identify the HR action and reason code categories that require generated earnings. You can insert additional rows if necessary.

Custom Statement Name

To indicate other conditions for earnings generation, you have to first set up a custom statement outlining those conditions. Enter the name of the custom statement in the Custom Statement Name field. If the custom statement conditions are met, the system generates earnings for all periods being processed. This means that during a delete-and-rebuild consolidation, which processes several periods at once, the system might generate earnings for all periods.

If an employee has multiple action-and-reason events that generate earnings for a single period—for example, a military leave and then a disability leave—the events are processed in chronological order. If your generation method replaces earnings for the entire period, earnings generated for the final event replace earnings generated for earlier events.

Generation Method

For each earnings generation condition that you set up, select a generation method:

• Replace with Compensation Rate: If you select this option, the system prorates the employee's compensation rate over the duration of the generation status and adds that amount to the actual earnings for the period.

• Replace with Fixed Amount: If you select this option, specify the fixed amount in the Replacement Earnings field.

• Replace with Previous Complete: If you select this option, the system uses the most recent full period earnings from the previous consolidated years. A full period is any period where the partial period fraction is 1.0.

• Replace with Previous Non-Zero: If you select this option, the system uses the earnings amount from the most recent period—partial or full—that has non-zero earnings.

• Uplift with a Factor: If you select this option, enter the factor in the Uplift Factor field. The actual earnings are then multiplied by the factor to yield the generated amount. For example, if the disability earnings amount is always half of normal earnings, you might uplift the earnings by a factor of two in order to make your consolidation reflect non-disability earnings.

  Note: When you select Uplift with a Factor, all earnings from the period are uplifted, not just those earned during a particular status. An alternative method of uplifting earnings is on the Establishing Earnings Parameter page, where you can specify a Pct of Earnings to include in the consolidation. For this disability example, you could enter 200 percent of disability earnings. The earnings would then be considered "actual" earnings instead of generated earnings.

• User Code: If you select this option, the system uses your custom code to generate an earnings amount.

Most of the methods replace all the earnings for the period. Only the Replace with Compensation Rate method can generate earnings for the period of time during which an employee actually meets the generation conditions. For example, Belinda went on leave at the end of 2002 and returned at the beginning of 2004. If you select Replace with Compensation Rate, the system generates earnings for the time she was on leave and adds those earnings to her actual 2002 and 2004 earnings. With any other method, the system overwrites the actual earnings from early 2002 and late 2004 with the generated earnings for those periods.

Single Partial Period

In the Single Partial Period group box, enter the Include Category and Exclude Category.

Include Category

Enter an Include Category with all the action and reason codes that start an include period, including those that end the generated earnings exclude segments and the compensation rate exclude segments.

Exclude Category

Enter an Exclude Category for other action and reason codes that start an exclude segment that stops no later than the end of the consolidation period.

Continuous Partial Period

In the Continuous Partial Period group box, enter an Exclude Category for action and reason codes that start an exclude segment that continues until the next "include" action and reason.

Termination and Hire/Rehire

Use the Termination and Hire/Rehire group boxes to set up adjustments for hire and termination periods.

In calculating the partial period fraction, hire actions are treated as "include" actions, and termination actions are treated as "exclude" actions.

The consolidation process adjusts a termination period only after a subsequent rehire. For example, if Quentin terminates in 2004, the 2004 consolidation period is his last. If he is rehired in 2006, the system adjusts the 2004 period, creates a zero-earnings 2005 period, and creates a 2006 period. Because the 2006 period includes the rehire action, it incorporates the hire period adjustment method you specify.

HR Action/Reason Category

Before you set up adjustments for hire and termination periods, you first must indicate how to recognize these periods. Enter the HR action and reason categories that indicate hire termination periods in the HR Action/Reason Category fields in the Termination and Hire/Rehire group boxes.

Adjustment Method

For each action and reason category that you set up, select an adjustment method for adjusting the earnings for the resulting partial period:

• Ignore: Select this option to ignore this period altogether.

• Use As Is: Select this option to treat the existing earnings as the total earnings for the period. If you want to use the period only if it produces better than average earnings, set up that condition in the Average Earnings definition.

  Note: Be sure that your consolidation and your Final Average Earnings definition use the same method to handle hire and termination periods.

• Annualize: If you select this option, also select a value in the Annualize Options column: Count Months or Count Days. If you count months, the system divides the earnings by the number of whole months in the included portion of the period, then multiplies the result by twelve (the number of months in a year). If you count days, the system divides the earnings by the number of included days in the period, then multiplies the result by the number of days in the month.

  If the consolidation period is months, you must count days. Regardless of the consolidation period, counting days always yields a more accurate result. Counting whole months understates the amount of time over which the earnings are accumulated and therefore overstates total earnings.

  For example, if you annualize calendar year earnings of 15,000 USD as of April 15, you get this result by counting months:

  (15,000 USD / 3) * 12 = 5,000 USD * 12 = 60,000 USD

  If you annualize the same amount by counting days, you get this result:

  (15,000 USD / 105) * 365 = 142.86 USD * 365 = 52,143.90 USD

• User: If you select this option, the system uses your custom code to adjust the earnings.