Retirement Deduction Calculations

Connecticut retirement requires reporting retirement compensation and contributions monthly from September to June. The retirement deduction is calculated as a percentage (currently 7.25%) of the annual expected salary remitted over the 10 months. The district sends a check for the monthly amount broken into two components – the higher percentage (currently 6%) is for the retirement and the lower percentage (currently 1.25%) is for medical insurance.

The CT Retirement Deduction Calculations process calculates both the deduction amount and the maximum deduction for the standard retirement deduction (deduct.ded_amt and deduct.max_amt), and the retirement annual salary which is reported for CT Retirement (empuser.ftext2). The CT Retirement Deduction Calculations should be run whenever changes have been made to employees' pay rates or retirement deductions, before processing payroll.

There are two options for calculating the retirement deduction, Initial Calculation and Final Calculation. Both options calculate the Retirement Annual Salary and the Deduction Amount and the Maximum Deduction amount for the retirement deduction. The initial calculation also adds a deduction record for the standard retirement deduction. Another difference between the initial and the final calculation is that each option calculates the retirement deduction amount in different ways:

• Initial Calculation: Deduction Amount = Maximum Deduction ÷ Number of Pays for Retirement Year

• Final Calculation: Deduction Amount = Maximum Deduction - Deduction Fiscal Taken to Date

Process Specific Set-up

Prior to using the application, the user should enter the following retirement-related information in the Human Resources Profile – State Window:

• Standard Retirement Deduction Code – Deduction code used for Connecticut retirement. The deduction code must be set up in the deduction table prior to running the calculation process. There must be only one standard retirement deduction code. Since the deduction amount is calculated using the percentages stored in the State Window, the deduction method should be "S – Employee Amount". The maximum method for the standard retirement deduction should be set to "F – Fiscal Year to Date".

• Low % – Percentage used to calculate the Health Insurance Fund contribution (currently 1.25%)

• High % – Percentage used to calculate the contribution posted to the membership/retirement account (currently 6%). The sum of the Low % plus the High % is multiplied by the Annual Retirement Salary to calculate the Maximum Deduction amount of the retirement deduction.

• Number of Pays for Retirement Year – The Maximum Deduction amount of the retirement deduction is divided by this number, and the result is either used to update the Deduction Amount (in the Initial Calculation) or as part of error reporting (in the Final Calculation).

• Additional Pay Retirement Deduction – Deduction code used for Connecticut retirement taken on additional pay that is not included in the annual retirement salary on the State Required page. The deduction must be setup as a table percentage equal to the total retirement deduction (low % + high %).
  The user should also enter the following retirement-related information on the employee's State Required page for each employee who is subject to Connecticut retirement:

• On Ret Rpt? – Enter 'Y' for any employee who should be reported in the retirement report and included in the retirement calculations. Enter 'O' for any employee who should be reported in the retirement report, but where the Annual Ret Sal is entered and should not be calculated from the pay rates by the retirement deduction initialization process.

Run the CT Retirement Deduction Calculations

1. Select State -> Human Resources -> CT Retirement Deduction Calculations.

2. Select the calculation type by clicking Initial Calculation or Final Calculation.

3. On the next page, select the destination for the report.

4. Click OK.

5. If errors occurred, a message is displayed.

   To  reset the On Ret Rpt? field in the State Required page from an O to a Y, click the Clear Annual Salary Overrides option, Once the overrides have been cleared, the program will re-set the annual retirement salary by calculating it from the pay rates and re-initialize the retirement deduction according to the calculated salary.

Processing

The program will extract and calculate retirement deduction amounts for employees who meet the following criteria:

• The employee has 'Y' or 'O'; in the "On Ret Rpt?" field in the State Required page (empuser.ftext1, page_no=32000).

• The employee has an 'O' in the "On Ret Rpt?" field in the State Required page for an annual retirement salary override or has an active pay rate with annual salary subject to Connecticut retirement. That is, the employee must have at least one active pay rate with annual salary greater than zero that uses a pay code that is not exempt from the Standard Retirement Deduction code.

• For the Final Calculation, the employee must have a numeric value in the "Annual Ret Salary" in the State Required page (empuser.ftext2, page_no=32000).
  The process calculates the following:

• Annual Retirement Salary – The system includes the annual salaries (payrate.annl_sal) from the employees' active pay rates for all pay codes that are not marked as exempt from the retirement deduction code. This total is then used to update the "Annual Ret Salary" in the State Required page (empuser.ftext2, page_no=32000), if the "On Ret Rpt?" field is not set to "O":. The total retirement salary is also used to calculate the retirement maximum deduction and deduction amount.

• Retirement Maximum Deduction – The total retirement for the fiscal year (retirement limit) is calculated as follows:
  Maximum Deduction = Annual Retirement Salary x (Low % + High %) / 100
  The employee’s maximum deduction amount (deduct.max_amt) for the retirement deduction is set to this amount.  The Low % (hrmstate.state3) and High % (hrmstate.state4) are taken from the Human Resources Profile – State Window.

• Retirement Deduction Amount (Initial Calculation) – The deduction amount (deduct.ded_amt) for the retirement deduction is calculated by the initial calculation as follows:
  Deduction Amount = Maximum Deduction ÷ Number of Pays for Retirement Year
  The employee’s deduction amount (deduct.ded_amt) for the retirement deduction is set to this amount.  The Number of Pays for the Retirement Year (hrmstate.state7) is taken from the Human Resources Profile – State Window.

• Retirement Deduction Amount (Final Calculation) – The deduction amount (deduct.ded_amt) for the retirement deduction is calculated by the final calculation as follows:
  Deduction Amount = Maximum Deduction - Deduction Fiscal Taken to Date
  The employee’s deduction amount (deduct.ded_amt) for the retirement deduction is set to this amount.  The deduction fiscal taken to date amount is the database field deduct.taken_f.

During the initial calculation:

If there are any employees who meet the criteria for processing, but do not currently have a deduction record for the Standard Retirement deduction code, the process will add the deduction record for the employee. The final calculation does not add deduction records.

During the final calculation:

If there are employees who meet the criteria for processing, and one of several errors occurs, an error message will be printed to an error report. The name of the error report file is "retinit.log". The error report is located in the directory associated with the FASRPTDIR environmental variable. The error messages are in the following format:

Employee: 9999 not updated: has non numeric value in annual salary

Employee: 9999 annual salary stored as 99999999.99 calculated as 99999999.99

Employee: 9999 deduction limit stored as 9999999.99 calculated as 9999999.99

Employee: 9999 deduction amount is 9999.99 changed to balance 9999.99

NOTE: based on calculated annual salary, deduction calculated as : 9999.99