Pension Contribution Calculation

[Former Member]

Hi all,

I'm setting up Canadian defined contribution and defined benefit pension plans in SAPs benefits module under "Savings Plans". The employee contribution for one plan should be 2.5% of earnings up to YMPE and 5% after that (where YMPE is $48,300 for 2011). For example, someone with earnings of $60,000 would be able to contribute:

2.5% of 48300 = 1207.5

5% of (60000-48300) = 585

1207.5 + 585 = $1792.5.

Is there a way to satisfy the above requirements using the Employee Contribution Rules under Savings Plans? How do I configure a 2.5% up to YMPE and 5% after YMPE?

Thanks,

Chirag

[former_member193210 · Accepted solution]

Yes. We have two different Pension Plans, set-up as Savings Plans (IT0169).

The first one will take the current "pensionable earnings" and multiply it by the Pre-YMPE Rate until YMPE is reached, and multiply it by the Post-YMPE Rate for any earnings over YMPE.

The second one is set-up so that the "pensionable earnings" are annualized first so that both the Pre-YMPE and Post-YMPE Rates are used in calculating the current contribution.

I don't remember the initial set-up, but almost every year we have to update fields CMINP, CMAXP, PMINP and PMAXP in table T74FH.

[former_member193210 · Accepted solution]

And don't forget to look at feature PYMPE.

[Former Member · Accepted solution]

I have maintained CMINP and CMAXP to 2.5% and PMINP and PMAXP to 5%. The 2.5% is being picked up properly however I'm not sure how to get it to switch to the post-YMPE rate. I tried setting the "Max. pre-tax" (field LIMIT) and this successfully limits the pre-tax contributions however the post-tax contributions don't kick in. I took a look at feature PYMPE and the plan I am using is currently set to NPRY which seems to make sense.

Can you think of something I may be missing to get the post-tax percentage to be used?

Also, do you know where the YMPE value is maintained in SAP?

Thanks for all the help,

Chirag

[former_member193210 · Accepted solution]

If &PYMPE=PYMP, the contribution rate should change from CMxxx to PMxxx once the YMPE has been reached.

The Canadian Year-End Note (1532936) lists all the table changes required, and you'll notice that the only change in table T5KTC for CPP is the following:

- Canada Pension Plan (CPP) contributions for 2011

For 2011, maximum pensionable earnings are $48,300 and the basic exemption for the year is $3,500.

The contribution rate for employees is 4.95%.

An employee's maximum contribution for the year is $2.217.60

The employer's contribution is an amount equal to the total of the employee's contribution.

CP 0 1 01.01.2011 31.12.9999 2.217.600 4,950 3.500,000

The YMPE is therefore derived from these values (probably by a "function module"), and it is not required as a value for Pension Plans to work correctly.

P.S. : In both our Pension Plans, the "Max. pre-tax" (field LIMIT) is blank.

[Former Member · Accepted solution]

I switched PYMPE to PYMP and it is now annualizing the pensionable earnings and applying the proper percentage for pre-YMPE and post-YMPE. It seems to be working exactly like the second plan you have setup: "The second one is set-up so that the "pensionable earnings" are annualized first so that both the Pre-YMPE and Post-YMPE Rates are used in calculating the current contribution."

My requirements, however, are more similar to the first plan you described: "The first one will take the current "pensionable earnings" and multiply it by the Pre-YMPE Rate until YMPE is reached, and multiply it by the Post-YMPE Rate for any earnings over YMPE."

My understanding is that this is how it should work when PYMPE is NPRY however this doesnu2019t seem to be working for me. The pre-YMPE rate continues to be applied even after pensionable earnings reach YMPE.

Your help is very much appreciated.

Chirag

[former_member193210 · Accepted solution]

It seems that I was a little too quick and copied the wrong line in feature PYMPE, but you tried it and confirmed that the system took into account the YMPE (even though it's not a direct value in any table).

If you have entered the Pre-YMPE and Post-YMPE rates in the configuration tables and in the employee's IT0169, it should work if feature PYMPE is set for NPRY. The contribution should switch rate once the employee has reached the YMPE (in CRT, either for WT /120 or the cumulative WT associated with your Savings Plan, as in /170, /171 ...)

[Former Member · Accepted solution]

Cher Rémi,

With your help I was able to understand what my issue was.

Under Payroll > Payroll: Canada > Benefits Integration > Define wage types for benefit plans:

I realized the pension plan I was working with was using a compensation model for salary determination. Because of this, it was necessary for me to create a corresponding cumulation wage type and assign it in the above path in the "Compens. wage type" field.

Also, another thing that complicating my testing is the fact that we are dealing with outsourced payroll. The payroll schema we are using for the outsourcing only runs gross payroll and does not populate table CRT, this only happens during import.

Thank you once again for your help.

Chirag

p.s. If you are ever in Montreal, drinks are on me!!!