pension modes

Clicking either of the Parameters buttons, for COLA rates, or U.K. Pension Increases, during either payment or deferral periods, under the Cost-of-Living Adjustments (COLAs) topic or the U.K. Pension Increases topic of Valuation Assumptions, respectively, leads you to another dialog box, in which you code additional parameters for payment period or deferral period COLAs. When there is more than one COLA rate table applicable during the payment period, or there is more than one COLA rate table applicable during the deferral period, these parameters specify how the COLAs vary, according to the calendar year of benefit payment that a COLA rate is associated with and/or the contents of a coded database field.

If rates vary by coded field/calendar year, first specify in the dropdown menu if the Rates are Tables or Constants. Then indicate whether the rates vary by the contents of a coded field on the database, that is, different rates should be used for different groups of records, identified by values of a coded database field (e.g., Division), check the Coded database field box and then select the field from the list of all coded fields unhidden in the current Project. A Database Code column will appear in the grid below: for each code value, there is a row in the grid for the applicable Rate Table or Constant Rate. For each database code, select the desired COLA rate table library entry or type the applicable constant COLA rate.

To indicate that the rates vary by calendar year of payment or deferral (i.e., the calendar year of the anniversary of the valuation date in the year of payment or deferral), check the Calendar years box and enter (in the text box below) for all rates that you will specify, the first calendar year to be associated with each particular rate. For example, if there will be one particular rate through 2008, another for 2009, yet another for all years 2010 through 2014 inclusive and one last rate in 2015 and later years, then enter “2009 - 2010, 2015” or "2009,2010,2015" in the text box. Two columns, From and To, will appear in the grid below, and rows appear according to the “breakdown by year” indicated by the text box entries. In our example, rows appear for years through 2008, for 2009, for 2010 through 2014 and for years 2015 and later, so that you may enter the rate associated with each set of years. For each year, select the desired COLA rate table library entry or type the applicable COLA rate.

To indicate that the rates vary by both a coded field on the database and the calendar year of payment or deferral, combine the instructions in the two paragraphs above; the grid below will populate with both the Database Code column and the From/To columns. Specify the desired COLA rate table library entry or type the applicable COLA rate for each combination of code value and year. Click the button to access the COLA Rate Table Library, where you can create new tables or modify existing ones.

If the option to vary COLA rates by duration from valuation date (only available for transfer value COLA in Canadian mode) is selected, then a spreadsheet with three columns, From, To and either Constant Rate or Rate Table, is displayed. Below the spreadsheet, specify whether these entries in the last column are Constant (each calendar year or duration has only one associated COLA rate, i.e., the COLA does not vary by age, duration from commencement or sex) or Table (a COLA rate table is assigned to each calendar year or duration).

The following is an example of coding this spreadsheet if the COLA rates vary by duration from the valuation date, using the Constant option: suppose that the COLA rate is 2% in the first 10 years after the valuation date (or after each future valuation date in a core projection) and 1% thereafter.

From	To	Constant Rate
--	10	0.02
10	--	0.01

ProVal fills in the To column automatically. The last rate will be used for the last year entered and all years thereafter; the first rate table will be used for the first year entered and all preceding years. Note that the From box in the first row cannot be completed. Our example involved only two COLA rate tables: if you have several tables in your assumptions, you may need to press the ENTER key, to create a new row, when you get to the bottom of the spreadsheet.

For each calendar year if the Table option is selected, or for each database field code, select a table from the list of all COLA rate tables unhidden in the current Project. If you wish to create a new COLA rate table or edit an existing one, click the Edit Rates button, which accesses the COLA Rate Table library.