Calculation of Overpayments on Death of Annuitant

Overview

The accounting for annuities that were overpaid after an annuitant’s date of death will automatically be reversed. 

Any overpayments will be offset against any lump sum benefit payable on the death of an annuitant.

Calculation

When a Benefit Payment is processed with a Benefit Event for which the Event Category is DEATH and the Event Category Subtype is POST RETIREMENT and the Type of Payment on the Membership Payment record is ANNUITANT, the system will read the Last Payment Date on the Membership Payment Detail record.  If the Last Payment Date is greater than the Calculation Effective Date (date of death) on the Benefit Request, the amount paid to the annuitant after the Calculation Effective Date will be calculated.

Processing

The system will read the Accounting Activity Association with a Bulk Purpose Type of PENSIONOVERPMT and retrieve the Business Transactions (BT’s) in the Member’s PENSIONPAYBL account with an Accounting Activity equal to the Accounting Activities linked via the Accounting Activity Association and for which the Due Date is greater than the last day of the month of the Calculation Effective Date and sum the amounts.

-   If it is MONTHLY and there is a Benefit Product with a Benefit Type of FAS, the system will calculate the Spouse’s and the Dependants’ portions of the Member’s Annuity and multiply the sum by the number of months from the Calculation Effective Date to the Date of Last Payment.

-   Guarantee Date

-  If there is a value for Guarantee Date on the Membership Payment record for the Annuitant and it is greater than the Last Payment Date, no Business Transactions (BT’s) will be created.

-  If there is no value for Guarantee Date, the system will calculate the difference between the amount paid to the Member after the Calculation Effective Date and the sum of the Spouse’s and Dependants’ portions of the annuity for the number of full months from the Calculation Effective Date to the Last Payment Date.

-  If the value for Guarantee Date is less than the Last Payment Date, the system will calculate the difference between the amount paid to the Member after the Calculation Effective Date and the sum of the Spouse’s and Dependants’ portions of the annuity for the number of full months from the Guarantee Date to the Last Payment Date.

-   If the Payment Frequency is not monthly, the system will determine the number of months from the Calculation Effective Date to the Last Payment Date and calculate the proportionate amount overpaid by dividing by the frequency.

-  If the payment frequency is QUARTERLY, the amount overpaid is divided by 3 and multiplied by the number of months from the Calculation Effective Date to the Date of Last Payment.

-  If the payment frequency is HALF YEARLY, the amount overpaid is divided by 6 and multiplied by the number of months from the Calculation Effective Date to the Date of Last Payment.

-  If the Payment Frequency is ANNUAL, the Regular Payment Amount is divided by 12 and multiplied by the number of months from the Calculation Effective Date to the Date of Last Payment.

-   If there is a Benefit Product with a Benefit Type of FAS the system will perform the following calculations:

-  Calculate the portion of the Spouse’s and the Dependants’ portions of the Member’s Annuity.

-  Calculate the proportion of the Spouse’s and the Dependants’ portions for the period from the Calculation Effective Date to the Last Payment date.

-  Calculate the difference between the proportionate amount paid to the Member after the Calculation Effective Date and the proportionate Spouse’s and Dependants’ portions of the annuity for the number of full months from the Calculation Effective Date to the Last Payment Date.

-   Guarantee Date

-  If there is a value for Guarantee Date on the Membership Payment record for the Annuitant and it is greater than the Last Payment Date, no Business Transactions (BT’s) will be created.

-  If there is no value for Guarantee Date, the system will calculate the difference between the proportionate amount paid to the Member after the Calculation Effective Date and the sum of the Spouse’s and Dependants’ portions of the annuity proportioned using the number of full months from the Calculation Effective Date to the Last Payment Date.

-  If the value for Guarantee Date is less than the Last Payment Date the system will calculate the difference between the proportionate amount paid to the Member after the Calculation Effective Date and the sum of the Spouse’s and Dependants’ portions of the annuity proportioned using the number of full months from the Guarantee Date to the Last Payment Date.

Business Transactions will be created for the difference between the amount paid to the Annuitant and the Spouse’s and Dependants portions with the following Accounting Activity:

-  If the financial period is not closed, Business Transactions will be created with the Transaction Date, Effective Date and Due Date equal to the Calculation Effective Date.

-  If the financial period is closed, the Business Transactions will be created with a Transaction Date equal to the first day of the month of the first month in the next open financial period.

-  The Spouse’s and Dependants’ records will be created with a Start Date equal to the first day of the month following the Last Payment Date.

The reversal of overpayment accounting is as follows:

Recovery from lump sum payment

If there is an overpayment amount and there is a Benefit Product with a Benefit Type of FAS a BEN ADJUST Benefit Update Type will be created.  

When the BEN ADJUST Update Type is processed, the PENRECOVERY Accounting Activity will be available for selection.  When it is selected, the Business Transactions will be created with the overpaid amount calculated above.

End dating of annuity record

When the End Date on the JU4DC Payment Details screen is updated with a Date that is less than the Last Payment Date on the latest Membership Payment Detail record, the following message will be displayed:

The end date is prior to the last payment date.  Must the accounting transactions be created for the recovery of the overpayment?

-   If the Yes button is selected, the system will read the Payment Frequency on the Membership Payment Detail Record.

-  If the Payment Frequency is monthly, the sum of the payments for each month from after the End Date, up to and including the month of the Last Payment Date, will be calculated.

-  If the Payment Frequency is ANNUAL, QUARTERLY or BI-ANNUAL, the sum of the payments after the End Date, up to and including the month of the Last Payment Date, will be calculated.

-  If there is a Membership Payment Detail record with a Payment Frequency of ONCE OFF or AD HOC for which the Last Payment Date is greater than the End Date, the single payment amount will be included in the total amount to be recovered.

-   The values of the payments made after the End Date will be summed and Business Transactions will be created for the total amount and with the following Accounting Activities:

-  If the financial period is not closed, Business Transactions will be created with the Transaction Date, Effective Date and Due Date equal to the End Date.

-  If the financial period is closed, the Business Transactions will be created with a Transaction Date equal to the first day of the month of the first month in the next open financial period.

Receipt of overpaid amount

The following Accounting Activity must be created to be used to capture the receipt of an annuity overpayment refund:

Write-off of overpayment not recovered

The following Accounting Activity must be created to be used to process a journal to write off an overpayment amount not recoverable: