Pensionable Service and Contribution Calculation for OTRFT Members

Transcription

1 Pensionable Service and Contribution Calculation for OTRFT Members Methodology and Calculator Demos June 27,

2 3 Agenda Pensionable Service (OTRFT Members) Contribution Calculation based on Annualization Methodology (OTRFT Members) Contribution Calculation (Miscellaneous) OTRFT What s new? Effective date of changes

3 Pensionable Service

4 5 Pensionable Service Prior to 2012: Hours worked / Full-Time Equivalent (FTE) hours Rounded to the nearest month Minimum of one month 2012 transition year: January 1 June 30: As above July 1 December 31: Hours worked / FTE hours Rounded to 5 decimals Minimum of one month if enrolled prior to July After 2012: Hours worked / FTE hours Rounded to 5 decimals

5 6 Pensionable Service Hours worked in calendar year relative to FTE hours For Pensionable Service purposes, a factor of 2.17 should be applied to Teaching Contact Hours (TCH) to get hours worked for Academic - Professors FTE hours are based on position For example, for Support members regular work hours per day 7, 7¼, 7½, 8 Used for PA and calculating pension benefit at termination or retirement Rounded to 5 decimal places

6 7 Pensionable Service: FTEs Admin / Support members: FTE hours in year equals hours worked per day times actual workdays in year Workdays in year vary depending on calendar year (260, 261, or 262) For example: Support member works 7 hours/day Workdays in 2013 = 261 FTE hours in year = 7 x 261 = 1827 (not 1820)

7 8 Pensionable Service: FTEs Academic members: Professors FTE hours = 44 hrs x 43 wks = 1892 Librarians / Counsellors FTE hours = 35 hrs x 43 wks = 1505

8 9 Pensionable Service: FTEs Job Group FTE Hours FTE in 2013 (261 workdays) Administration 7.5 x workdays Support 7 hrs/day 7 x workdays 1827 Support 7¼ hrs/day 7.25 x workdays Support 7½ hrs/day 7.5 x workdays Support 8 hrs/day 8 x workdays 2088 Academic - Librarian/Counsellor Academic - Professor

9 10 Pensionable Service: Lump Sums Lump sum payments include, for example: continuing education courses task or assignment based work (e.g. curriculum writing, marking) Difficult to assign service credit to lump sums number of hours to complete task varies

10 11 Pensionable Service: Lump Sums Options for assigning service credit to lump sums: 1. Apply known hourly rate of pay Rate paid to complete task should be consistent with other rates of pay Service credit would be calculated accordingly 2. Estimate hours to complete task If no consistent rate of pay, determine how long it should take to complete task Report the corresponding number of hours

11 12 Pensionable Service: Lump Sums 1. Apply known hourly rate of pay - example Service credit = Lump Sum / hourly rate of pay John writes a document: His hourly rate of pay is $50 He receives $1,200 John would accrue $1,200 / $50 = 24 hours of service credit for writing the document Pensionable service = 24 / FTE for position

12 13 Pensionable Service: Lump Sums 2. Estimate hours to complete task - example Service credit = Estimated number of hours to complete task Jane has been hired to mark mid-term papers It is anticipated that it should take her 50 hours to complete the marking Pensionable service = 50 / FTE for position

13 14 Pensionable Service

14 15 Pensionable Service Calculator Excel spreadsheet has been developed to calculate Pensionable Service for OTRFT Spreadsheet can be used to help code your payroll system Data elements Formulas Pensionable Service calculation required: Annually (for DCT reporting and PAs) Terminations and Retirements Leaves

15 16 Pensionable Service Calculator Calculator inputs Year (to determine FTE Hours) Enrolment/Termination Dates (if in the calendar year) For each OTRFT contract: Employee Group Contract Start/End Dates (to cap service for contract) Hours in calendar year (regular and, if applicable, TCH) For each lump-sum paid task: Employee Group Lump Sum and Hourly Rate OR Estimated Task Hours

16 17 Pensionable Service Calculator Example OTRFT Member joins the Plan April 1, 2013 Maximum Pensionable Service 197/261 = (197 workdays Apr 1-Dec 31) Contract #1: Administration, April 1-October 31, 800 hours Maximum Pensionable Service 154/261 = (154 workdays Apr 1-Oct 31) Calculated Pensionable Service 800 hours / FTE =

17 18 Pensionable Service Calculator Contract #2: Teaching (Academic Professor), September 1- December 31, 180 TCH + 10 non-tch Maximum Pensionable Service 87/261 = (87 workdays Sep 1-Dec 31) Calculated Pensionable Service [(180 x ) hours] / 1892 FTE = Contract #3: Lump-sum based task, Support role (7-hour workday) Paid $1,800, hourly rate $ /30 = 60 hours Calculated Pensionable Service 60 hours / 1827 FTE = Total Pensionable Service Not capped (less than maximum for year)

18 19 Pensionable Service Calculator Pensionable Service Calculation for OTRFT Member ver: Employee Name Employee ID/SIN Calendar Year Select a year Show/Hide Lump Sum Section Clear OTRFT Hours Worked and FTE Hours Job Group Job #1 Job #2 Job #3 Job #4 Job #5 Job #6 Job #7 Job #8 Job #9 Job #10 Hours in Cal. TCH in Cal. Print Maximum Year Year Total Hours in Pensionable Contract Start Contract End FTE Hours Service (Regular) (Professors) Cal. Year Service Errors/Notes Lump-Sum Based Work Lump Sum Service Type Estimated Task Hours Lump Sum Amount Hourly Rate Numerator (Hours) Job Group Denominator (FTE Hours) Pensionable Service Errors/Notes LS #1 LS #2 LS #3 LS #4 LS #5 LS #6 LS #7 LS #8 LS #9 LS #10 Total Pensionable Service for Maximum Pensionable Service Calculated Pensionable Service

19 20 Pensionable Service Calculator Data entry cells shaded in yellow Dropdown cells shaded in blue Basic data entry: Pensionable Service Calculation for OTRFT Member Employee Name Example 1 Employee ID/SIN Calendar Year 2013 Date of Enrolment/Switch to OTRFT (if in 2013) 1-Apr-2013 Date of Termination/Last day of OTRFT (if in 2013)

20 21 Pensionable Service Calculator Data entry for regular OTRFT Contracts Space for up to 10 regular contracts Hours in Cal. Year TCH in Cal. Year OTRFT Hours Worked and FTE Hours in 2013 Maximum Total Hours in Pensionable Job Group Contract Start Contract End FTE Hours Service (Regular) (Professors) Cal. Year Service Job #1 Administration 1-Apr Oct Job #2 Academic - Professor 1-Sep Dec Job #3 Job #4 Data entry for Lump-Sum based work Space for up to 10 Lump Sum-paid tasks Lump-Sum Based Work in 2013 Lump Sum Service Type Estimated Task Hours Lump Sum Amount Hourly Rate Numerator (Hours) Job Group Denominator (FTE Hours) Pensionable Service LS #1 Hourly Rate of Pay $1, $ Support (7 hrs/day) LS #2 LS #3 Print

21 22 Pensionable Service Calculator Pensionable Service results Maximum Pensionable Service based on fraction of the year in the Plan Total Pensionable Service for all regular contracts and lump sum-paid tasks compared to maximum Pensionable Service for 2013 Maximum Pensionable Service (Based on enrolment and/or termination date) Calculated Pensionable Service Total OTRFT Pensionable Service for

22 23 Pensionable Service Calculator (OTRFT Members) Demonstration

23 24 Pensionable Service

24 Contributions based on Annualization Methodology

25 26 Contribution Calculation Replaces Step-rate method Contribute at low and high rates on each pay Contributions taken are consistent with how benefits are credited

26 27 Contribution Calculation Annualization calculation methodology for contributions based on hours paid relative to FTE hours Methodology is the same regardless of payroll frequency (i.e. bi-weekly or monthly / semi-monthly)

27 28 Contribution Calculation Brings YMPE earnings threshold down to the fraction of the year paid in a pay period Step-rate calculation on a fraction of a year basis Pro-rating based on actual hours paid in the period versus FTE hours Pay Period Percentage (PP%): proportion of a year that a member is paid in a pay period

28 29 Contribution Calculation Cumulative Earnings in Year above YMPE ($51,100) Cumulative Earnings in Year up to YMPE ($51,100) Contribute at 14.4% (to RPP) Contribute at 10.8% (to RPP) Earnings in Pay Period above YMPE Earnings in Pay Period up to YMPE Annual Step-Rate Pay Period Step-Rate

29 30 Contribution Calculation: Actual FTE hours FTE hours equal number of possible paid workdays in each year multiplied by number of hours expected to be worked by a full-time member each day If paid bi-weekly, FTE hours will vary depending on pay periods in year (26 or 27) If paid monthly/semi-monthly, FTE hours will vary depending on workdays in calendar year

30 31 Contribution Calculation: Actual FTE hours Bi-weekly pay periods: For example Support (7 hr/day): Workdays in pay period = 10 Bi-weekly pay periods in year = 26 Paid workdays in year = 10 x 26 = 260 FTE hours = 260 x 7 = 1820 Monthly / semi-monthly pay periods: For example Support (7 hr/day): Paid workdays in year = 261 (2013) FTE hours = 261 x 7 = 1827

31 32 Contribution Calculation: Standard FTE hours Standard FTE for all OTRFT job classes: Suggested standard FTE = 1900 Used in calculating contributions only Pensionable service must use actual FTE Simplifies the programming Can combine multiple jobs/contracts

32 33 Contribution Calculation: FTEs in 2013 Job Group FTE Hours (26 bi-weekly pays) FTE Hours (monthly / semimonthly pays) Administration Support 7 hrs/day Support 7¼ hrs/day Support 7½ hrs/day Support 8 hrs/day Academic - Librarian/Counsellor Academic - Professor OR Standard FTE

33 34 Contribution Calculation: Actual vs Standard FTEs Example: Admin: 30 hrs/wk at $50/hr FTE hours Hours/week Pay Rate Earnings/week Contrib Option 1 Actual FTE $50/hr 30 x $50 = $1,500 $ Option 2 Standard FTE $50/hr 30 x $50 = $1,500 $ Difference ($0.73) (0.39%)

34 35 Contribution Calculation: Actual vs Standard FTEs (multiple jobs) Options if member has multiple jobs with different FTE at the same employer: Run payroll for each job using actual FTE in calculating the contributions OR Use the standard FTE for all jobs and add all earnings and hours

35 36 Contribution Calculation: Actual vs Standard FTEs (multiple jobs) Example: Faculty: 6 TCH* at $60/hr Support (7 hr/day): 14 hrs at $35/hr Admin: 22.5 hrs at $40/hr * TCH must be multiplied by 2.17 before entering into spreadsheet (6 x 2.17 = 13.02)

36 37 Contribution Calculation: Actual vs Standard FTEs (multiple jobs) Job type FTE hours Hours/week Pay Rate Earnings/wk Contrib Option 1 Faculty x 2.17 = $60/hr 6x$60 = $360 $39.18 Support $35/hr 14x$35 = $490 $56.41 Admin $40/hr 22.5x$40 = $900 $ Total $1,750 $ Option 2 Standard $1,750 $ Difference $0.10 (0.05%)

37 38 Contributions based on Annualization Methodology

38 39 Contribution Calculator OTRFT contribution calculation spreadsheet has been developed Methodology to work with College payrolls Spreadsheet can be used to help code your payroll system Data elements Formulas

39 40 Contribution Calculator Two versions of spreadsheet 1. FTE Hours determined by various parameters: Pay Frequency # of pay periods in the year (26 or 27 for biweekly payrolls) Employee Group 2. Standard FTE = 1900 Hours Reduces number of inputs

40 41 Contribution Calculator Standard 1900 FTE for all OTRFT members For Contribution calculation purposes only Not for Pensionable Service purposes Allows payments from multiple contracts or job categories to be added up and have a single contribution calculation performed on the total Standard FTE for OTRFT members means: Job group not required Pay frequency and pay periods in year not required

41 42 Contribution Calculator Calculator inputs (Standard FTE Hours version) Member name and ID (optional) Year (defaults to 2013) Actual Hours Paid in Pay Period Regular Hours TCH (for Professors) multiplied by 2.17 Hours for Lump Sum payments in line with hours used for Pensionable Service Pensionable Earnings Paid in Period Regular and Lump Sum combined into one input field

42 43 Contribution Calculator Example OTRFT member: In a given pay period, member is paid: 30 regular hours x $40/hr = $1,200 $600 lump sum for a task that pays $60/hour 10 hours pensionable service, use for contributions as well Total for pay period: 40 hours, $1,800 Pay Period Percentage = 40 / 1900 FTE = % YMPE in pay period: $51,100 x % = $1, Split earnings: $1, up to YMPE, $ above Calculate contributions: Low Rate: 10.8% x $1, = $ High Rate: 14.4% x $ = $ Total: $220.48

43 44 Contribution Calculator (show details) ver: (standard FTE) Contribution Calculation Worksheet - OTRFT Please note that this spreadsheet can be used for all other than regular full-time (OTRFT) members. > Multiply Teaching Contact Hours (TCH) by 2.17 and add to non-tch hours for Actual Hours Paid input. > For task-based lump sum payments, determine hours for task either based on an hourly rate (lump sum/hourly rate = hours paid), or based on the expected hours the task should take (regardless of how long it actually takes). Use the same number of hours for contribution purposes as for pensionable service purposes. Please enter information in blue dropdowns and yellow data entry cells Contributions for the pay period will appear in the bright green cells at the bottom of the worksheet Member Name = (optional) Member ID/SIN = (optional) Year = 2013 YMPE = $51, Contribution Rate (% up to YMPE and % above YMPE) = 10.8% and 14.4% FTE Hours in Year = 1900 Standard FTE of 1900 hours for contributions for all OTRFT Actual Hours Paid in Pay Period ** = Actual Pensionable Earnings Paid in Period (including Lump Sums) = Pay Period Contribution Calculation Step 1: Calculate Pay Period Percentage (PP%, portion of the full calendar year's hours being paid in the current period) Pay Period Percentage (PP%) = (Hours Paid this Prd) / (FTE Hours in Year) ** Multiply TCH by 2.17 before entering actual hours paid. ** For Lump Sum payments, use the same number of hours for contribution purposes as those used for pensionable service purposes (Lump Sum/Hourly Rate OR Estimated Task Hours). ( ) / ( ) = (A) Step 2: Calculate YMPE in Pay Period YMPE in Period = (YMPE) x (PP% - A) ( ) x ( ) = (B) Step 3: Split Pensionable Earnings in the Pay Period into components up to and above the YMPE Earnings in Period up to YMPE = Minimum [ (Earnings in Period), (B) ] Minimum [ ( ), ( ) ] = (C) Earnings in Period above YMPE = (Earnings in Period) (C) ( ) - ( ) = (D) Step 4: Contributions up to and above the YMPE Contributions up to YMPE = (% up to YMPE) x (C) ( ) x ( ) = (E) Contributions above YMPE = (% above YMPE) x (D) ( ) x ( ) = (F) Step 5: Total Contributions for Pay Period Total Contributions (all RPP) = (E) + (F) ( ) + ( ) = (G) Clear Print Show/Hide Details

44 45 Contribution Calculator (hide details) ver: (standard FTE) Contribution Calculation Worksheet - OTRFT Please note that this spreadsheet can be used for all other than regular full-time (OTRFT) members. > Multiply Teaching Contact Hours (TCH) by 2.17 and add to non-tch hours for Actual Hours Paid input. > For task-based lump sum payments, determine hours for task either based on an hourly rate (lump sum/hourly rate = hours paid), or based on the expected hours the task should take (regardless of how long it actually takes). Use the same number of hours for contribution purposes as for pensionable service purposes. Please enter information in blue dropdowns and yellow data entry cells Contributions for the pay period will appear in the bright green cells at the bottom of the worksheet Clear Print Show/Hide Details Member Name = (optional) Member ID/SIN = (optional) Year = 2013 YMPE = $51, Contribution Rate (% up to YMPE and % above YMPE) = 10.8% and 14.4% FTE Hours in Year = 1900 Standard FTE of 1900 hours for contributions for all OTRFT Actual Hours Paid in Pay Period ** = Actual Pensionable Earnings Paid in Period (including Lump Sums) = Pay Period Contribution Calculation Total Contributions for Pay Period Total Contributions (all RPP) = (E) + (F) ** Multiply TCH by 2.17 before entering actual hours paid. ** For Lump Sum payments, use the same number of hours for contribution purposes as those used for pensionable service purposes (Lump Sum/Hourly Rate OR Estimated Task Hours). ( ) + ( ) = (G)

45 46 Contribution Calculator Data entry cells shaded in yellow Dropdown cells shaded in blue Data entry (Standard FTE Hours version): Member Name = Example Calc (optional) Member ID/SIN = (optional) Year = 2013 YMPE = $51, Contribution Rate (% up to YMPE and % above YMPE) = 10.8% and 14.4% FTE Hours in Year = 1900 Standard FTE of 1900 hours for contributions for all OTRFT Actual Hours Paid in Pay Period ** = 40 ** Multiply TCH by 2.17 before entering actual hours paid. Actual Pensionable Earnings Paid in Period (including Lump Sums) = $1, ** For Lump Sum payments, use the same number of hours for Pay Period Contribution Calculation contribution purposes as those used for pensionable service purposes (Lump Sum/Hourly Rate OR Estimated Task Hours).

46 47 Contribution Calculator Steps in the Calculation Logic 1. Calculate the PP% Member paid for 40 hours Standard 1900 FTE Hours in calendar year OR FTE determined by pay frequency and job group 2. YMPE in pay period Step-rate in pay period threshold Pay Period Contribution Calculation Step 1: Calculate Pay Period Percentage (PP%, portion of the full calendar year's hours being paid in the current period) Pay Period Percentage (PP%) = (Hours Paid this Prd) / (FTE Hours in Year) ( 40 ) / ( 1900 ) = % (A) Step 2: Calculate YMPE in Pay Period YMPE in Period = (YMPE) x (PP% - A) ( $51, ) x ( % ) = $1, (B)

47 48 Contribution Calculator Steps in the Calculation Logic (cont d) 3. Split pensionable earnings into portions up to and above the YMPE 4. Contributions (low/high rates) 5. Total Contributions (all RPP for OTRFT) Step 3: Split Pensionable Earnings in the Pay Period into components up to and above the YMPE Earnings in Period up to YMPE = Minimum [ (Earnings in Period), (B) ] Minimum [ ( $1, ), ( $1, ) ] = $1, (C) Earnings in Period above YMPE = (Earnings in Period) (C) ( $1, ) - ( $1, ) = $ (D) Step 4: Contributions up to and above the YMPE Contributions up to YMPE = (% up to YMPE) x (C) ( 10.8% ) x ( $1, ) = $ (E) Contributions above YMPE = (% above YMPE) x (D) ( 14.4% ) x ( $ ) = $ (F) Step 5: Total Contributions for Pay Period Total Contributions (all RPP) = (E) + (F) ( $ ) + ( $ ) = $ (G)

48 49 Contribution Calculator (Annualization Methodology) (OTRFT Members) Demonstration

49 50 Contributions based on Annualization Methodology

50 Contributions based on Annualization Methodology (Miscellaneous)

51 52 Contribution Calculation: Miscellaneous Difference between FT and OTRFT Lump sum only (FT) Year-end reconciliation Pension Adjustments

52 53 Contribution Calculation: Miscellaneous Difference between FT and OTRFT Service measure PP% Different methodology depending on pay frequency Lump sums Earnings Allocate to RCA during year FT Hours (Support) or days (Admin / Faculty) Fraction of a pay period Yes One-time; no hours attached Basic and one-time lump sums entered separately Yes OTRFT Hours Fraction of a year No Hours attached One entry (lump sums included with basic) No

53 54 Contribution Calculation: Miscellaneous Lump sum only FT member Run the final partial pay period without lump sum Run the final partial pay period with lump sum Difference equals contributions on lump sum Example: Final regular pay: $1,800 (5 days) Contributions: $ Lump sum vacation paid at next pay: $10,000 Contributions on regular pay ($1,800) + lump sum ($10,000): $1, Contributions on lump sum = $1, $ = $1,440

54 55 Contribution Calculation: Miscellaneous Year-end reconciliation may be required YMPE threshold FT: if go from below to above threshold in a pay period, but annualized earnings are below OTRFT: if multiple jobs or concurrent with annualized earnings below / above threshold RCA threshold FT: if go from below to above threshold in a pay period, but annualized earnings are below OTRFT: if multiple jobs or concurrent with annualized earnings above threshold Standard FTE If actual contributions versus expected contributions are not within tolerance

55 56 Contribution Calculation: Miscellaneous Pension Adjustments (PA) Scenario: Earnings in year but no service Contract ends in one year but final pay is in next year Not known if member will get another contract If no other contract, then will have earnings but no service T4 reporting Report earnings in current year (no service attached) Recalculate prior year s PA including additional earnings Difference between prior year s PA and recalculated PA should be reported as current year s PA

56 OTRFT What s new?

57 58 OTRFT - what s new? Lump sums must attach hours using either: Hourly rate of pay, or Estimated hours to complete task FTE for Support staff is no longer 1820 for all FTE should be based on position (e.g. if Support member working 8hrs/day, then FTE is 8 x workdays = 2088 in 2013)

58 59 OTRFT - what s new? FTE for Faculty is no longer 648 Academic Professors: FTE = 1892 Academic Librarians/Counsellors: FTE = 1505 Academic - Professors hours worked equal: TCH x non-tch

59 60 Effective date of changes Contracts that started prior to January 1, 2014 and continue into 2014: Implement Pensionable Service calculation effective Jan 1, 2014 Implement contribution calculation effective the first pay of Jan 2014 Contracts starting on or after January 1, 2014: Implement new rules for Pensionable Service and contribution calculations effective contract start date

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61 62 Questions about this webinar? Tracey Leask Calculator inquiries: Matt Kerbel General inquiries: Phone: Toll Free: