Correct masterfile setup for employee going on disability

Question

Good day 
 Please assist with the correct masterfile setup for an employee who is going on disability. She is currently 62 and the company contribution to the provident fund must continue until she is at retirement age, which is 65. 
 Thank you!

Nteboheleng William M. · Answer

Hi SAWC 
 Thank you for reaching out, and this is a great question as disability cases need careful handling on the masterfile. 
 Here's the general approach on Sage VIP Classic/Premier: 
 1. Keep the employee active on the payroll Don't terminate her on the IS screen &mdash; she remains "in service" until she reaches retirement age at 65, even though she's no longer working. This allows the provident fund contribution to continue processing each month. 
 2. Zero the normal salary Remove or zero her fixed salary/package on the payslip. If her disability income (PHI benefit) is paid through the payroll, remember that income protection payouts have been non-taxable since 1 March 2015 &mdash; link this earning to IRP5 code 3602. 
 3. Continue the provident fund company contribution Because her pensionable salary is now zero, the contribution can't calculate on a percentage of payslip earnings anymore. You'll need to either fix the company contribution amount on her benefit fund/CC line (usually based on her pre-disability pensionable salary), or use a calculation basis the fund specifies. The contribution remains a taxable fringe benefit (code 3825), with the deemed employee contribution reflecting under 4003 and the employer portion under info code 4473 &mdash; so note she may still have PAYE on the fringe benefit even with no salary. 
 4. Confirm the fund rules first Before setting anything up, check with the fund whether the policy includes a contribution waiver benefit &mdash; in many disability cases the insurer takes over the contributions, in which case it shouldn't run through payroll at all. 
 To point you to the exact screens and setup, could you confirm: 
 
 Will her disability income be paid through your payroll, or directly by the insurer to her? 
 Is the fund contribution a percentage of pensionable salary or a fixed amount, and should it be based on her salary as at the date of disability? 
 Does the fund offer a contribution/premium waiver on disability? 
 
 Once I have these details, I can guide you through the specific masterfile changes step by step. 
 Kind Regards, William

Sage VIP Classic and Sage VIP Premier

Correct masterfile setup for employee going on disability

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