Pension Plan Customising in GB Flexible Benefits

Purpose

The following document outlines in greater detail the customising that you must carry out when implementing Flexible Benefits Pension Plans for your employees.

This graphic is explained in the accompanying text.

The customising process described below is performed in the Benefits Administration IMG, under: Plans → Pension Plans (FLEX)

Prerequisites

Pension selling

Within GB FlexBens, employees may choose to sell a portion of their pension contributions in return for an equivalent salary enhancement or flex fund increase. This is referred to as Pension Selling.

You use the Pension Sell Check indicator to define how any pension surplus generated by an employee selling pension contributions is processed by the system, for each of your benefit areas.

You must have previously maintained this indicator in Customising, in the Benefits Administration IMG, under: Basic Settings -> Define Flexible Benefits NI Neutrality/Pension Sell Parameters (FLEX) , if you want the system to perform a check on how any pension selling surplus is handled by the GB Flexible Benefits system.

This graphic is explained in the accompanying text.

If you set this indicator, any pension selling surplus is returned to the employee's flex fund and is therefore available for spending on other Flexible Benefits. If you do not set this indicator, any pension selling surplus can be returned to the employee as a salary adjustment, which you set up in Customising using customer wage types. Therefore, the Pension Sell Check indicator controls whether you perform a check on how any pension selling surplus is handled by the GB Flexible Benefits system.

Process Flow

The customising for Pension Plans in Flexible Benefits for Great Britain should be carried out in the following order:

Create a pension plan type (V_T5UB1 / V_T74_FBN00)

In view V_T5UB1, create a plan type for pension. The plan category is E (Miscellaneous Plan).

In view V_ T74_FBN00assign a pension plan indicator for this plan type.

Create a pension plan (V_5UBA_E / V_T74_FBN_GB04)

In view V_5UBA_E, create a pension plan, assign an appropriate pension plan type to it and make sure that the plan is coverage- and cost-relevant.

In view V_T74_FBN_GB04, assign an appropriate pension scheme ID to this plan. The pension scheme ID is maintained in view V_T5G30_T.

Create a plan coverage variant and plan coverage rule (V_74FB_B / V_74FC_B)

In view V_74FB_B, create a coverage variant for the pension plan.

In view V_74FC_B, create a coverage rule for the pension plan.

(The salary factor in the coverage rule must be set to 1, to ensure 100% of the pre-flex salary is used as the pensionable base).

This graphic is explained in the accompanying text.

The purpose of the two steps above is to define the calculation base for the cost rule, particularly when using percentages for pension contribution amounts. The above steps are used to define the percentage base. For example, if the contribution is 5% of the pre-flex salary, then in view V_74FC_B, the salary factor must be maintained as 1.

Create a plan cost variant and plan cost rule (V_5UBH_B / V_5UBI_B)

In view V_5UBH_B, create a cost variant for pension plan.

In view V_5UBI_B, create a cost rule for pension plan.

The purpose of the above two steps is to define the employer contribution into the pension plan, the standard contribution and the available flex contribution. If percentages are used in pension contributions, the base unit for the cost rule must be set to 100 and a percentage must be entered in the field cost factor . Corresponding numbers of cost variants should be created according to the number of options in the pension plan.

This graphic is explained in the accompanying text.

The standard employer contribution is 8% of the pre-flex salary. The flex contribution is 6%. In view V_5UBI_B, for the flex and standard variants, enter 100 in the field base unit ; enter 6 in the field cost factor in the section employee costs , and enter 8 in the field credit factor in the section employer credit.

If you wish to divide the pre-flex salary into bands and define different percentages for each band, then in view V_5UBH_B, set the step limit indicator and maintain an appropriate step limit value in view V_5UBI_B.

Define employee pension contribution (V_T74_FBN_GB05)

In view V_T74_FBN_GB05, maintain the appropriate employee pension contribution into the pension plan. If the employee contribution is obtained from the existing infotype instead of from the customising table, then set the indicator read from infotype .

If the employee contribution is flexed with the employer contribution in a matching rule, maintain a distinct employee contribution for each standard and flex employer contribution. If in the flexible benefit system only employer contributions can be flexed, then employee contributions should be kept the same for each employer contribution value.

Define option for pension plan (V_T74FL)

In view V_T74FL, create options for the pension plan with coverage variant and cost variants. The employee contribution rule is linked with the cost variant in view V_T74_FBN_GB05. Assigning a cost variant to the plan ensures that both employer and employee contribution rules are linked with the plan.

Define salary sacrifice pension plan (V_T74_FBN_GB08)

If the pension plan is a salary sacrifice plan, define this parameter in view V_T74_FBN_GB08 by setting the Salary sacrifice indicator. Assign a NI neutrality calculation method to this plan (if applicable).

Assign wage types for pension plan

During enrolment, the plan option cost is calculated based on the pre-flex salary. In most cases, you may use the model benefit basic salary wage type BSAL .

This graphic is explained in the accompanying text.

There is a possibility that a non-pensionable element may be counted into BSAL since it is a wage type used for various plans.

Result

You have completed the standard customising to implement Flexible Benefits Pension Plans for your employees.