1. Administering Teachers' Pension Scheme for the United Kingdom
  2. Backdated Pay Awards

Backdated Pay Awards

You must configure backdated pay awards to calculate Monthly Contributions Reconciliation (MCR) contributions using the "when paid" (BK) method.

The steps to do this include the configuration of:

  • Salary action or actions for a pay award and the predefined Pay Award action reason.
  • New formula to identify the pay award salary change.
  • Pension scheme balance and calculator formula changes.

The setup steps for the above and advice on how to process your backdated pay awards to meet TP requirements are described below.

Associate Salary Action with Pay Award Action Reason

Using the Configure Actions tasks, identify a salary action as pay award-related by associating it with the predefined Pay Award action reason:

  1. Search for and select a salary-related action, for example, 'Change Salary'.
  2. Associate the salary action with the predefined action reason code 'Pay Award'.

Create Pay Award Formula

Using the Fast Formulas task, create and compile a new formula to identify the salary change due to a pay award. The formula type must be Oracle Payroll.

See attached file PS_BACK_DT_PAY_AWARD_EARN_RETRO_PROCESS_FORMULA.txt.

FORMULA NAME: TPS_BACK_DT_PAY_AWARD_EARN_RETRO_PROCESS

/* Database Item Defaults */
DEFAULT FOR HRX_GB_TPS_ACT_REASON_CD_PAY_AWARD_DBI is 0
DEFAULT FOR GB_TPS_BACK_DT_PAY_AWARD_ASG_NOCB_RUN is 0
DEFAULT FOR GB_TPS_BACK_DT_PAY_AWARD_ASG_NOCB_PTD is 0            

/* Inputs  */
INPUTS ARE        amount (number),                 
                  pay_value(number)

l_log = PAY_INTERNAL_LOG_WRITE('(GLBEARN)Initializing the Pay Award Formula ')

l_amount           = amount
l_value            = 0
l_value_info_element = 0
l_value = pay_value
l_asg_nocb_run = GB_TPS_BACK_DT_PAY_AWARD_ASG_NOCB_RUN
l_asg_nocb_ptd = GB_TPS_BACK_DT_PAY_AWARD_ASG_NOCB_PTD

/* Key Variable values retrival*/
l_element_entry_id       = GET_CONTEXT(ELEMENT_ENTRY_ID, 0)

l_log = PAY_INTERNAL_LOG_WRITE(' Retro Formula step 0 l_value : '||to_char(l_value ))
l_log = PAY_INTERNAL_LOG_WRITE(' Retro Formula step 0 l_asg_nocb_run : '||to_char(l_asg_nocb_run ))
l_log = PAY_INTERNAL_LOG_WRITE(' Retro Formula step 0 l_asg_nocb_ptd : '||to_char(l_asg_nocb_ptd ))
l_log = PAY_INTERNAL_LOG_WRITE(' Retro Formula step 0 element_entry_id : '||to_char(l_element_entry_id))

IF (l_asg_nocb_run <> l_asg_nocb_ptd) THEN

(
   l_value_info_element =   0
   l_log = PAY_INTERNAL_LOG_WRITE('Retro Formula step 1 l_value_info_element : '||to_char(l_value_info_element ))
)
ELSE IF HRX_GB_TPS_ACT_REASON_CD_PAY_AWARD_DBI WAS NOT DEFAULTED THEN
(
 l_value_info_element =   l_value     

   l_log = PAY_INTERNAL_LOG_WRITE('Retro Formula step 2 l_value_info_element : '||to_char(l_value_info_element ))   
   )
    
  l_log = PAY_INTERNAL_LOG_WRITE('(GLBEARN) Derived value : '||TO_CHAR(l_value))

RETURN l_value          ,
       l_value_info_element 

/* End Formula Text */

Status Processing Rule

  • Create Status Processing Rule of Earning Retro Element with new formula created previously and configure earning retro element as below:
    • Result Returned = L_VALUE_INFO_ELEMENT
    • Result Rule = Indirect Result
    • Target Element Name = Backdated Pay Award Information TPS (predefined element)
    • Target Input Value = Pay Value
    • Unit of Measure = Money

Processing and Reporting Backdated Pay Awards

When a retroactive calculation is performed and the action reason for a salary increase is Pay Award, any arrears calculated are excluded when the process is calculating the contribution tier.

The Pay Value input value of the predefined nonrecurring information element, Backdated Pay Award Information TPS feeds the predefined information balance Backdated Pay Award Information TPS to manage the tier calculation. If the value of the balance is not zero, then the calculation of the tier excludes this amount.

Teachers’ Pension requires you to report U lines for corrections and then U lines for the backdated pay awards (in that sequence). You must perform your payroll and other processes in a specific sequence to achieve this – first do your MCR corrections as one process and payroll run, then your backdated pay awards as a separate process and payroll run.

The suggested sequence is therefore:

  • Regular monthly payroll activities including corrections, completed.
  • HCM Rates run.
  • Retroactive processing for corrections run.
  • Payroll run for corrections.
  • Backdated pay awards applied.
  • HCM rates run.
  • Retroactive processing for pay awards run.
  • Payroll run for pay awards.
  • Other processes.

Some considerations:

  • Don’t do further corrections in the same period after the BK changes and payroll run.
  • If you update a salary record with a backdated pay award and then run the MCR before the payroll run, the MCR will not reflect the payroll results.
  • You must process the Generate HCM Rates process prior to the payroll run, ideally combined in a process flow. Do not submit the MCR flow if you’ve run Generate HCM Rates without a corresponding payroll run.
  • A backdated pay award when there are no other pensionable earnings must be reported on a 'When Earned' basis.
  • You must process backdated pay awards applied to TLRs at the same time as backdated salary pay awards because the salary pay award action is the trigger for the BK line in the MCR.