Pensionable Service and Contribution Calculation for … · Contribution Calculation for OTRFT...

2

Pensionable Service and

Contribution Calculation

for OTRFT Members Methodology and Calculator Demos

June 27, 2013

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

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

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

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


Academic members:

Professors

FTE hours = 44 hrs x 43 wks = 1892

Librarians / Counsellors

FTE hours = 35 hrs x 43 wks = 1505

8


9

Job Group FTE Hours FTE in 2013

(261 workdays)

Administration 7.5 x workdays 1957.5

Support – 7 hrs/day 7 x workdays 1827

Support – 7¼ hrs/day 7.25 x workdays 1892.25

Support – 7½ hrs/day 7.5 x workdays 1957.5

Support – 8 hrs/day 8 x workdays 2088

Academic -

Librarian/Counsellor

1505 1505

Academic - Professor 1892 1892

Pensionable Service: Lump Sums

10

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


11

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


12

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


13

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

Pensionable Service

14

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


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


Example

OTRFT Member joins the Plan April 1, 2013

• Maximum Pensionable Service

197/261 = 0.75479 (197 workdays Apr 1-Dec 31)

Contract #1:

• Administration, April 1-October 31, 800 hours


154/261 = 0.59004 (154 workdays Apr 1-Oct 31)

• Calculated Pensionable Service

800 hours / 1957.5 FTE = 0.40868

17


Contract #2:

• Teaching (Academic – Professor), September 1-

December 31, 180 TCH + 10 non-TCH


87/261 = 0.33333 (87 workdays Sep 1-Dec 31)


[(180 x 2.17 + 10) hours] / 1892 FTE = 0.21173

Contract #3:

• Lump-sum based task, Support role (7-hour workday)

• Paid $1,800, hourly rate $30 1800/30 = 60 hours


60 hours / 1827 FTE = 0.03284

Total Pensionable Service 0.65326

• Not capped (less than maximum for year)

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Pensionable Service Calculation for OTRFT Member ver: 2013.0627

Employee Name

Employee ID/SIN

Calendar Year Select a year

OTRFT Hours Worked and FTE Hours

Contract Start Contract End FTE Hours Errors/Notes

Job #1

Job #2

Job #3

Job #4

Job #5

Job #6

Job #7

Job #8

Job #9

Job #10

Lump-Sum Based Work

Lump Sum Service Type Hourly Rate 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

Lump Sum

Amount Job Group

Numerator

(Hours)

Total Hours in

Cal. Year

Denominator

(FTE Hours)

Pensionable

Service

Hours in Cal.

Year

(Regular)

TCH in Cal.

Year

(Professors)Job Group

Pensionable

Service

Maximum

Service

Estimated

Task Hours

Clear

Print

Show/Hide Lump Sum Section


Data entry cells shaded in yellow

Dropdown cells shaded in blue

Basic data entry:

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Pensionable Service Calculation for OTRFT Member

Employee Name

Employee ID/SIN 10101

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)

Example 1


Data entry for regular OTRFT Contracts

Space for up to 10 regular contracts

Data entry for Lump-Sum based work

Space for up to 10 Lump Sum-paid tasks

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OTRFT Hours Worked and FTE Hours in 2013

Contract Start Contract End FTE Hours

Job #1 1-Apr-2013 31-Oct-2013 1957.5 0.59004 800 800 0.40868

Job #2 1-Sep-2013 31-Dec-2013 1892 0.33333 10 180 400.6 0.21173

Job #3

Job #4

Maximum

Service

Pensionable

Service

Hours in Cal.

Year

(Regular)

TCH in Cal.

Year

(Professors)Job Group

Administration

Academic - Professor

Total Hours in

Cal. Year

Print

Lump-Sum Based Work in 2013

Lump Sum Service Type Hourly Rate

LS #1 Hourly Rate of Pay $1,800.00 $30.00 60 1827 0.03284

LS #2

LS #3

Pensionable

Service

Estimated

Task Hours

Numerator

(Hours)

Denominator

(FTE Hours)

Lump Sum

Amount Job Group

Support (7 hrs/day)


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

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Pensionable Service for 2013

Maximum Pensionable Service 0.75479 (Based on enrolment and/or termination date)

Calculated Pensionable Service 0.65326

Total OTRFT Pensionable Service for 2013 0.65326

Pensionable Service

Calculator (OTRFT Members)

Demonstration

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Pensionable Service

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Contributions

based on

Annualization

Methodology


Replaces “Step-rate” method

Contribute at low and high rates on each pay

Contributions taken are consistent with how

benefits are credited

26


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


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

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Cumulative

Earnings in Year

above

YMPE ($51,100)

Contribute at 14.4%

Cumulative (to RPP)

Earnings in Year Earnings in

up to Pay Period

YMPE ($51,100) above

YMPE

Earnings in

Contribute at 10.8% Pay Period

(to RPP) up to

YMPE

Annual Step-Rate Pay Period Step-Rate

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

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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

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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

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Contribution Calculation: FTEs in 2013

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Job Group FTE Hours

(26 bi-weekly

pays)

FTE Hours

(monthly / semi-

monthly pays)

Administration 1950 1957.5

Support – 7 hrs/day 1820 1827

Support – 7¼ hrs/day 1885 1892.25

Support – 7½ hrs/day 1950 1957.5

Support – 8 hrs/day 2080 2088

Academic -

Librarian/Counsellor

1505 1505

Academic - Professor 1892 1892

OR

Standard FTE 1900 1900

Contribution Calculation: Actual vs Standard FTEs

Example:

Admin: 30 hrs/wk at $50/hr

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FTE hours Hours/week Pay Rate Earnings/week Contrib

Option 1

Actual FTE 1950 30 $50/hr 30 x $50 = $1,500 $187.69

Option 2

Standard FTE 1900 30 $50/hr 30 x $50 = $1,500 $186.96

Difference ($0.73)

(0.39%)


(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


(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)

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(multiple jobs)

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Job type FTE hours Hours/week Pay Rate Earnings/wk Contrib

Option 1

Faculty 1892 6 x 2.17 = 13.02 $60/hr 6x$60 = $360 $39.18

Support 1820 14 $35/hr 14x$35 = $490 $56.41

Admin 1950 22.5 $40/hr 22.5x$40 = $900 $108.37

Total 49.52 $1,750 $203.96

Option 2

Standard 1900 49.52 $1,750 $204.06

Difference $0.10

(0.05%)

Contributions based on Annualization Methodology

38

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


Two versions of spreadsheet

1. FTE Hours determined by various parameters:

• Pay Frequency

• # of pay periods in the year (26 or 27 for bi-

weekly payrolls)

• Employee Group

2. Standard FTE = 1900 Hours

• Reduces number of inputs

40


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


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


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 = 2.105263%

YMPE in pay period: $51,100 x 2.105263% = $1,075.79

Split earnings: $1,075.79 up to YMPE, $724.21 above

Calculate contributions:

• Low Rate: 10.8% x $1,075.79 = $116.19

• High Rate: 14.4% x $724.21 = $104.29

• Total: $220.48

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Contribution Calculator (show details)

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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 = $51,100.00

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 CalculationStep 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)

( ) / ( ) = (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)

** 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).

ver: 2013.0627 (standard FTE)

Clear Print

Show/Hide Details

Contribution Calculator (hide details)

45

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 ID/SIN = (optional)

Year = 2013

YMPE = $51,100.00



Actual Hours Paid in Pay Period ** =

Actual Pensionable Earnings Paid in Period (including Lump Sums) =

Pay Period Contribution CalculationTotal Contributions for Pay Period


( ) + ( ) = (G)





ver: 2013.0627 (standard FTE)

Clear Print

Show/Hide Details


Data entry cells shaded in yellow

Dropdown cells shaded in blue

Data entry (Standard FTE Hours version):

46


Member ID/SIN = 12345 (optional)

Year = 2013

YMPE = $51,100.00



Actual Hours Paid in Pay Period ** = 40

Actual Pensionable Earnings Paid in Period (including Lump Sums) = $1,800.00

Pay Period Contribution Calculation

Example Calc






47

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 CalculationStep 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 ) = 2.105263% (A)

Step 2: Calculate YMPE in Pay Period

YMPE in Period = (YMPE) x (PP% - A)

( $51,100.00 ) x ( 2.105263% ) = $1,075.79 (B)


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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 [ ( $1,800.00 ) , ( $1,075.79 ) ] = $1,075.79 (C)

Earnings in Period above YMPE = (Earnings in Period) (C)

( $1,800.00 ) - ( $1,075.79 ) = $724.21 (D)

Step 4: Contributions up to and above the YMPE

Contributions up to YMPE = (% up to YMPE) x (C)

( 10.8% ) x ( $1,075.79 ) = $116.19 (E)

Contributions above YMPE = (% above YMPE) x (D)

( 14.4% ) x ( $724.21 ) = $104.29 (F)

Step 5: Total Contributions for Pay Period


( $116.19 ) + ( $104.29 ) = $220.48 (G)


(Annualization Methodology)

(OTRFT Members)

Demonstration

49

Contributions based on Annualization Methodology

50

Contributions

based on

Annualization

Methodology

(Miscellaneous)

Contribution Calculation: Miscellaneous

Difference between FT and OTRFT

Lump sum only (FT)

Year-end reconciliation

Pension Adjustments

52


Difference between FT and OTRFT

53

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


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: $223.82

Lump sum vacation paid at next pay: $10,000

Contributions on regular pay ($1,800) + lump sum ($10,000):

$1,663.82

Contributions on lump sum = $1,663.82 – $223.82 = $1,440

54


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


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?

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

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 2.17 + non-TCH

59

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

60

Questions about this webinar?

Tracey Leask

[email protected]

416.673.9009

Calculator inquiries:

Matt Kerbel

[email protected]

416.673.9037

General inquiries:

[email protected]

Phone: 416.673.9000

Toll Free: 1.800.355.2228

62

mailto:[email protected]







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