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Irish Pension

Scope of Functions

This release note describes:

• How to maintain pension contributions

• How the system calculates pension contributions

Employee pension contribution information is stored in Infotype Pensions Ireland (0361). Ensure that all the relevant information is maintained in the infotype.

The following three methods are available to calculate pension contributions:

• Annual Percentage Contribution (APC)

• Contribution per Pay Period (CPP)

• Flat Rate Contribution (FRC)

In the Pension schemes Ireland table (T7IEP), you store specific information valid to individual pension schemes. For example, based on your company, you could have numerous pension schemes which are calculated using CPP.

The methods of calculating pension contributions for pension schemes are as follows:

Annual Percentage Contribution (APC)

The system calculates contributions for the APC scheme as follows:

1. The system must first determine the employee's adjusted base pay for pension. This is the sum of the following components:

• The employee's annual salary (as indicated in Infotype Basic Pay (0008))

• A Shift Premium % (which is a % of the employee's annual salary) as indicated in Infotype 0361 (if applicable)

• An Additional Amount as indicated in Infotype 0361 (if applicable)

1. In the next step, the pensions exemption amount is calculated. This is determined by multiplying the exemption constant amount by the State pension constant. Both of these constants must be pre-defined in the Pensions schemes Ireland table (T7IEP).
2. The exemption amount is then subtracted from the adjusted base pay for pension.
3. Next, the pension contribution amount must be determined. The system multiplies the amount derived in the previous step by the percentage indicated in the Contribution % field on Infotype 0361.
4. The system determines the pension contribution by multiplying the amount derived in the previous step by the percentage indicated in the Contribution % field on Infotype 0361.
5. The value (from the previous step) is an annual pension contribution amount. This amount is therefore divided by the employee's number of pay periods to determine the pension contribution per pay period.

Note

The APC is calculated once a year (at the start of the pension year). The pension contribution is the same amount per pay period throughout the pension year.

Employee, employer, and additional voluntary pension contributions from Infotype 0361 are all calculated in the same manner (as indicated above). In the case of additional voluntary contributions, the contribution can be a flat amount irrespective of when the employee's contribution is APC or CPP.

Example

The following information is valid for an employee based on annual figures.

• Base pay for pension (Annual Salary for Infotype (0008)) = £10,000

• Shift premium is 20% = £2000

• Additional amount = £2000

The employee's adjusted base pay for pension is therefore £14,000 (the sum of the above salary components).

The employee's exemption amount is £5000 (calculated by multiplying the pensions constant (1.5%) by the state pensions constant (3333)).

The system now subtracts the exemption amount of £5000 from the adjusted base pay for pension of £14,000, to derive the employee's adjusted base pay for pension after exemptions at £9000.

Next, as the employee's pension Contribution % is 5% of their adjusted base pay for pension after exemptions their annual pension contribution is £450.

Since this employee is paid on a monthly basis, their monthly pension contribution is £37.50 per month.

Contribution per Pay Period (CPP)

The system calculates contributions for the CPP scheme as follows:

1. The system must first determine the employee's adjusted base pay for pension. This is the sum of the following components:

• The employee's cumulative wages for the pay period (as indicated in /111)

• A Shift Premium % (which is a % of the employee's cumulative wages) as indicated in Infotype 0361 (if applicable)

• An Additional Amount as indicated in Infotype 0361 (if applicable)

1. In the next step, the pensions exemption amount is calculated.

The system derives this amount by first dividing the state pensions constant by the number of pay periods applicable for the employee. This amount is then multiplied by the exemption constant amount. Note: Both of these constants must be pre-defined in the Pensions schemes Ireland table (T7IEP).

1. The exemption amount is then subtracted from the adjusted base pay for pension.
2. Finally, the system determines the pension contribution by multiplying the amount derived in the previous step by the percentage indicated in the Contribution % field on Infotype 0361.

Note

As the CPP is calculated on a per pay period basis, the pension contributions amount per period can vary per pay period depending on the adjusted base pay forpension.

The system uses the dates in the From and To fields on Infotype 0361, to determine the employee's pension settings for the pay period.

Example

The following information is valid for an employee in a given (monthly) pay period:

• Base pay for pension (/111) = £833

• Shift premium is 20% = £166

• Additional amount = £166

The employee's adjusted base pay for pension is therefore £1,165 (the sum of the above salary components).

To calculate the employee's exemption amount, the system divides the state pensions constant by the number of pay periods applicable for the employee (3333/12)). This amount is then multiplied by the exemptions constant (1.5). The exemption amount is therefore £416.

The system now subtracts the exemption amount of £416 from the adjusted base pay for pension of £1,165, to derive the employee's adjusted base pay for pension after exemptions at £749.

Finally, the system multiplies the employee's pension Contribution % of 5% from the amount in the previous step. The pension contribution for the current period is therefore £37.50.

Flat Rate Contribution (FRC)

FRC pension contribution amounts are based on an amount which is entered into the Periodic Amount field in the Flat Contribution section in Infotype 0361.

Effects on Customizing

See in the IMG Pensions Schemes.

Further notes

See also the OSS Note 149488.

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