Pension Payment Advances (Annuity)

In cases where a cheque payment is made to pensioners because they were not paid in the monthly annuity process (e.g. because they had not returned their certificates of existence in time), a manually initiated accounting activity must be used.  The payment amount that is captured must be for the net amount, i.e. the pensioner's annuity less tax and third party deductions, if applicable.

This process will ensure that the year to date figures and last payment dates are updated correctly during the next month's run, when the correct annuity, tax and deductions are paid during the monthly annuity process.  The member level accounting within the system will reflect the payment, and then the correction, during the next run.

The following is the manually initiated accounting activity to be used:

-          MANUAL INITIATE    PENADVANCE

For a full explanation of the process, refer to

Accounting

Transaction Capture

Manual Accounting Transactions 

The amount advanced must be captured on the annuitant's record as an ad-hoc deduction. 

When the following month's annuity run is processed, the following accounting activity will be produced for the ad-hoc deduction:

-          ANNUITY                FNDPENDED

Example

This is an example of the effects of these accounting activities, together with the accounting activities created in the monthly annuity process.

Monthly pensions amount:      1000.00

Monthly deduction:                 200.00

Monthly tax:                         100.00

Net pension payment:             700.00

Amount advanced:                 700.00

In the following month's annuity run, these entries will be processed:

Double payment:                  2000.00

Double deduction:                  400.00

Tax on the double payment:    200.00

Once off refund deduction:      700.00

The following accounting transactions will be created:

Manual Payment

Annuity Run

The member accounts will look as follows: