Annuity Data Migration

Data preparation

The following should be considered during the preparation of data:

-    Member data must have valid dates of birth.

-    For double annuity cases, the second annuity record benefit type must be different from the first.  In the cases where the benefit type is the same, the type must be changed.

-    For suspended members, the correct last payment date must be captured.  When these members are eventually unsuspended, the payment run will pay them from the last date that they got paid until the due date of the run.

-    Create a separate file for YTD records.  This is required when the migration takes place part way through the tax year.  
Confirm that the YTD record start dates are the same as the annuity record start date (this prevents a new relationship being created).
Example:  If the migration is taking place part way through the 2011 tax year, ensure that the effective date of annuity YTD records is 01/03/2010 or later depending on whether or not the annuity started after 01/03/2010 (field 12, position 139-146). 

-    When the loading of deduction records is being prepared, ensure that the correct organization code (field 39, position 357-362), is used on the file (this relates to the corporate client code under the infrastructure).

-    Ensure that all deductions that are tax deductable are coded with a tax relief indicator as well as the percentage of relief applicable (fields 22 and 25).  RA deductions is an example. 

-    Medical aid deductions do not require a TAX relief flag or percentage.  The payment run automatically treats medical aid as tax deductable for persons over age 65.   

-    Create a separate file for deduction YTD as well as tax YTD records.

-    Create and load bulk journal load files for both YTD annuity and YTD tax records.  This will create the actual accounting transactions that will be used by the payment run.  
Note:
The bulk journal load file will load the accounting transactions against the main member.  Provide the Vendor with a copy of every bulk journal load file and indicate if any records were for a spouse, dependant or disabled dependant.  As an interim solution, the Vendor has developed a script that must be run to move the accounting to the correct person.

-    If there are joint and survivorship cases with a spouses % that applies on death, then this percentage can be captured in field 41, MIN_PENSION_PERCENTAGE position 383 – 389.  This is extracted by the annuity valuation report. 

For more information on the accounting activities generated by the payment run, refer to

Supplements

Accounting Activities generated by the Payment Run

Loading annuity data

The following process is recommended:

Load membership records

-    Using the member file, load the membership records for all of the members.  It is recommended that an assumed member record be loaded for the spouses and children (beneficiaries) who do not have a member record on the existing legacy system.  The assumed member details are derived as follows:

-    Check the results:
Confirm the number of records loaded.
Check the static data.

Load the annuity detail records for all membership

-    Load the annuity file for annuity records only.
The annuity file will upload the beneficiaries.  On this file the spouses, dependants and disabled dependants details are captured.  When the file is uploaded the beneficiary personal details will be loaded by the program.
The language and marital status are not presently uploaded for beneficiaries.  There is a separate script required to do this.  For this script, the Vendor requires a file containing surname, initials, DOB, ID, language and marital status. 

-    Check the results.
Confirm that the correct relationships have been created for beneficiaries.
Check the data.

Load deductions

-    Load the deduction records using the annuity detail file format AB77.  3rd party reference numbers must be extracted as part of the deduction file if required.  This number is a medical aid number or policy number.

-    Check the results.
Check the data.

Load annuity YTD records (if migrating midway through tax year)

-    Load the annuity YTD file for the annuity YTD records.  This is loaded with the annuity file format AB77.

-    Check the results.
Check that no new relationships have been created (this is easily checked for beneficiaries.  A new relationship goes hand in hand with the end-dating of an existing relationship).

Load deduction YTD records (if migrating midway through tax year)

-    Load the deduction YTD file for the deduction YTD records.  This is loaded with the annuity file format AB77.

-    Check the results.
Check that no new relationships have been created (this is easily checked for beneficiaries.  A new relationship goes hand in hand with the end-dating of an existing relationship).
Confirm one YTD record per deduction institution.

Load tax YTD records (if migrating midway through tax year)

-    Load the Tax YTD file for the Tax YTD records.  This is loaded with the annuity file format AB77.

-    Check the results.
Check that no new relationships have been created (this is easily checked for beneficiaries.  A new relationship goes hand in hand with the end-dating of an existing relationship).

Load banking details  

-    Load the banking details file.

-    Check the results.
Check the data.

Load address details

-    Load the address details file.

-    Check the results.
Check the data.

Load joint survivor future spouse details

-    Load the beneficiary file.  The only time the beneficiary file upload is used, is to load future spouse personal details for joint survivor members.  This file is loaded under new business following the same steps as when loading an annuity file.  
Only spouses are loaded.
Data assumptions are needed where data is missing

-    Check the results.
Check the data.

Perform bulk journal load

-    Perform the bulk journal load for annuity YTD and tax YTD accounting records.

-    Where the scheme is a Bonus Provision Takeover scheme, a separate YTD for the Bonus amount that has already been taxed, and the tax on that bonus, must be created.  These amounts must then be excluded from the Annuity YTD and Tax YTD. 

-    The accounting activities to be used are as follows.

-    Provide the Vendor with a copy of every Bulk Journal Load file and indicate if any records were for a Spouse, Dependant or Disabled Dependant.  The Vendor has developed a script that must be run to move the accounting to the correct person.  Add every person’s ID number at the end of each record.  This Script must be run before the BT post is run.   

-    A file must be provided for the YTD tax relief, on Annuity, deduction and Medical AID for the year to date.  The file must contain the scheme code, reference number, YTD tax relief amount and ID number if Beneficiary or spouse.  A script will be run to include the tax relief values to the Annuity YTD’s already loaded.

-    Example 1 - If a member has a 25% tax relief on their annuity (possibly for service outside of South Africa), and the member receives an annuity of R20 000.00 pm, the tax relief is R5000.00 pm.  Therefore, if the Migration is on 1 June, the tax relief for the year to date will be R15000.00. 

-    Example 2 – If a member is over age 65 and has a medical aid deduction of R2000.00 pm, then if the member migrates on 1 July, the tax relief for the year to date will be R8000.00

To view the data take-on layout referred to here, refer to
Processes

File Transfer

File Layouts

Upload Bulk Journal File

For Sanlam, refer to

Client Specific

Sanlam

Bulk Journal File Take on Layout

Suspended members

-    The take-on for suspended members must be taken on with field 16 annuitant_status (position 181-195), equal to ACTIVE and field 38 amendment_reason (position 342–356) equal to ADHOC.  Consideration must be given to the outstanding amount owing if the annuity becomes active sometime in the future.  This must be done in one of the following recommended ways:
Take on the annuity payment record with field 13, date_of_last_payment (position 147-154) set to be equal to the last date that the annuity was paid.  When the annuity is made active, the payment run will pay all instalments from the date of the last payment date to the due date of the run.  The payment run will ensure that the accounting for the part of the payment that was due in the previous tax year is recorded within the previous tax year, thus ensuring that the IRP5 will reflect income correctly.
Two annuity payment records must be created, one for the actual annuity record and one for the arrears.  Take on the actual annuity payment record with a last payment record equal to the last valid payment run for the scheme.  The arrears owing to the person must then be taken on as a separate annuity payment record.  This record must have field 10 payment_type (position 116–130), equal to EX GRATIA and field 16 annuitant_status (position 181-195), equal to ADHOC.  In addition, field 57 benefit_type (position 559-562) must be equal to the same value as the actual annuity record.
Note:
If arrear payments are made across tax years, the payment due in the previous year will be taxed as a bonus received in the current tax year.  This will impact suspended cases.

Annuity payment run

When the Annuity Payment run is authorised and Year to Date records are updated, the records in the table below will be created as per the detail in the Change column.  For all of the other existing YTD records, the records will be created as per the existing process.

Processing

Annuity Payment Run 

Taxable Income:

In the monthly annuity payment run if there is a Membership Payment record with a Payment Type of TAX INCOME, the system will create a BT with the following Accounting Activity for the Regular Payment Amount on the associated Membership Payment Detail record (but a payment will not be created):

The system will create a Year To Date record for the additional taxable income.

The Regular Payment Amount and the Year To Date amount will be included on the Payslip under the Annuity.

If there are any arrear payments, the Membership Payment record with a Payment Type of TAX INCOME will be treated in the same way as for the Membership Payment records with a Payment Type of ANNUITY i.e. multiply the Regular Payment Amount by the number of arrear payments. 

Tax Calculation:

When the system retrieves the BT’s to determine the taxable income for the tax year up to the month prior to the run month for calculating tax, the BT’s in the NOTIONALPMT account will also be retrieved.

When calculating tax, the Regular Payment Amount on the Membership Payment Detail record linked to the Membership Payment record with a Payment Type of TAX INCOME will be added to the Regular Payment Amount on the Membership Payment Detail record linked to the Membership Payment record with a Payment Type of ANNUITY and any others that are included in the tax calculation.

Additional tax amount deductions: 

Cases where the Member requires an additional tax amount to be deducted when the tax on the annuity payment amount is calculated is currently catered for on the system by setting up a Membership Payment record which must be captured with a Payment Type of DEDUCTION and Payee equal to the relevant Receiver of Inland Revenue e.g. SARS.

No payment is created and a separate Business Transaction is created for the additional voluntary tax amount.  It is displayed separately on the annuitant payslip and is included in the Tax Report as Additional Tax.