Employee Retirement Processing

Retirement Processing Overview

Before an employee can receive pension payments, a number of steps are required. These steps include verifying birth dates and marital status, producing and verifying a final calculation, and obtaining spousal waivers and payment elections. After these preretirement tasks are complete, you can tell the system to begin making pension payments.

Using Pension Administration, you can:

Track all preretirement tasks.
Indicate the calculation on which you base payments.
Indicate an employee's optional form selections.
Create the payment record that will be the basis for making payments.
Schedule payment instructions as far ahead as desired.

Payment instructions include:
- Start payments.
- Stop payments.
- Payment adjustments.

Pension Administration assumes that retirees are paid by an external trustee and that the trustee handles all W-2P and 1099-R reporting.

Payee Setup

Three types of people might receive a benefit under a pension plan:

Retirees (who were once employees).
Their beneficiaries.
QDRO alternate payees, former spouses who have a court-ordered right to a portion of an employee's benefit.

You already track employee data by using an employee ID and all its associated data, such as personal data and job data. To track pension payee data, you also use the employee ID and the personal and job records.

For retirees, you use the existing employee ID. For beneficiaries and QDRO alternate payees, who start out as dependents or beneficiaries of employees, you select an existing employee ID if this person already has an employee ID, or create a new employee ID based on the person's existing dependent or beneficiary data.

All three types of payees require new job records reflecting their roles as pension payees. You create a concurrent job for each plan under which a person is receiving a benefit. You do not use existing employee job records; all payee jobs are specific to pension processing.

Pension Payment Processing

The system provides a trustee extract, with all the information a third-party needs to produce the check and tax reports. This includes the check date and pay period, the payment amount, the tax elections, and any benefit deductions.

To set up the system for payment processing, you create a retiree payment calendar where you create run control IDs for each pension check run.

To prepare payments for individual pension payees:

Record a payee's check information, including tax elections, direct deposit information, and any deductions.
Record the payee's optional form selection, except for beneficiaries, who use the same optional form as the original employees whose beneficiaries they are.
Schedule recurring payments, using an effective date and status to indicate when the payments should start and stop.

You can also schedule one-time payments or adjustments as needed.

During a pension pay run, the system gathers payment-related information for all the scheduled payments. This information includes not only payment amounts, but also the tax elections, deduction information, direct deposit information, and funding providers for the payment. The payment process writes all this information to payment records, which you can review online or in a report before making a final "confirmation" pay run.

When you process a confirmation pay run, the system creates a trustee extract to put all the payment information in a file that you can then transfer to the third-party trustee who produces the pension checks. There are pages and a report for viewing the contents of the trustee extract.