German pension mode
Benefits for active and terminated vested participants are determined by the Benefit Promise. The Benefit Promise is simply a collection of individual benefits payable under various contingencies, where each benefit may (generally) be specified as payable to actives, to terminated vested participants or to both.
Five types of benefits may be included in a Benefit Promise. Four are benefits payable from the decrements: retirement, termination, death and disability. The fifth benefit is “In-Service”, that is, benefits payable to a plan member while in active or terminated vested status, typically jubilee benefits. Employee contributions (a type of “benefit” in ProVal’s other pension modes) are not currently supported in German mode. The termination decrement can be applicable only for active participants.
The number of benefits (Benefit Definitions) of each type that may be included in a plan’s Benefit Promise is unlimited. Each Pension or Deferred Compensation promise must include at least one retirement benefit, while each Jubilee promise must contain at least one in-service benefit. In addition, during execution of a Valuation or Core Projection, ProVal will warn you `about each decrement to which the active population is subject that does not lead to a benefit. For example, if you include an active mortality table in the valuation assumptions but do not have a death benefit included in your plan, ProVal will point this out at execution.
If you have several benefits listed as initiated by the same contingency, ProVal will decide, based upon a few parameters, which benefit is paid:
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The eligibility requirements for these benefits may or may not overlap. If an individual is concurrently eligible for two benefits, then both may be paid. For example, the eligibility requirement for the standard retirement benefit may be age 55, while a supplemental benefit has eligibility requirements from age 55 to 62. An individual retiring between 55 and 62 gets both benefits, while an individual retiring after 62 gets only the standard benefit.
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Post-decrement probabilities may be associated with one or more of the benefits. Suppose that two retirement benefits are included in the plan, one with a lump sum payment form and the other with a life annuity payment form. If post-decrement probabilities of 70% and 30%, respectively, were associated with these benefits, then an individual retiring from service would have a 70% chance of getting a lump sum and a 30% chance of getting an annuity. Although having post-decrement probabilities add to 1 is common, it is not required. Also see Benefit Definitions – pension modes for the parameter used to apply these probabilities.
The eligibility requirements for the retirement benefits included in the plan have additional significance in that they affect the manner in which the decrement tables identified in your valuation assumptions are used. The way they affect decrements depends on the type of the promise, as described below in the discussion of Promise type.
Name is a text field for the name of the promise for which benefits are defined.
The 
button allows you to enter additional information (notes) that will be stored with the Benefit Promise. The button will change to 
, to indicate that notes have been entered. Also, if notes have been entered, the first line of the notes will appear (ghosted) beneath the promise name.
Promise type allows you to select whether this is a Pension, Jubilee, Deferred Compensation Ongoing or Deferred Compensation Optional Benefit Promise. This affects what benefits are permitted in the promise, what benefits are required and how eligibility requirements are used. In addition, benefits in Jubilee promises are subject to unique valuation methods for purposes of the Teilwert.
In Pension, Deferred Compensation Ongoing and Deferred Compensation Optional promises, the following statements apply:
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Benefits included: At least one retirement benefit must be included.
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Eligibility requirements: Eligibility requirements specified in Benefit Definitions are applied without adjustment.
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Decrements: Before earliest retirement eligibility, an active participant will be subjected to the possibility of termination but not retirement, even if the retirement table has non-zero values. After earliest retirement eligibility, the situation reverses: the termination decrement “turns off” and the retirement rates begin to apply. Note that if there are groups of plan participants with different conditions for early retirement eligibility, it is usually necessary to define, and run them through, separate Benefit Definitions (with the groups selected by means of a Selection Expression under the Eligibility section), so that termination rates are not turned off for all groups of participants at the earliest retirement eligibility that applies to any of the groups.
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Post-termination benefits: Active benefits apply to current actives both before and after assumed termination, so the retirement, death and disability contingencies are applied both before and after the termination decrement; these three contingencies are considered “second decrements” for post-termination benefits.
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Deferred Compensation Ongoing Promises: If the Benefit Promise date is on or after 1/1/2001, each participant’s Teilwert (or PSVaG) liability will be set equal to the maximum of the Teilwert (or PSVaG) liability and the PVAB liability; the normal cost will be set equal to the corresponding normal cost for the liability type (Teilwert or PSVaG). Before 1/1/2001, the liability and normal cost will be the same as that for Teilwert (or PSVaG). Note: The Unit Credit method must be selected under the Additional Liabilities topic of the Valuation Assumptions and you should specify the first funding age as zero.
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Deferred Compensation Optional Promises: If the Benefit Promise date is on or after 1/1/2001, each participant’s Teilwert (or PSVaG) liability and normal cost will be set equal to the PVAB liability and normal cost. Before 1/1/2001, the liability and normal cost will be the same as that for Teilwert (or PSVaG). Note: The Unit Credit method must be selected under the Additional Liabilities topic of the Valuation Assumptions and you should specify the first funding age as zero.
The Benefit Promise date can differ from the Benefit Promise date in other Benefit Promises for the Plan.
In Jubilee promises, the following statements apply:
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Benefits included: At least one In-Service benefit must be included in each Jubilee promise. Disability, death and retirement benefits associated with an In-Service benefit should be included in the same promise with that benefit.
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Eligibility requirements: Eligibilities for disability, death and retirement benefits in Jubilee promises will be adjusted automatically. ProVal will examine the eligibilities for all In-Service benefits included in all Jubilee promises contained in the Plan Definition. Eligibility for each death, disability and retirement benefit in a Jubilee promise will be “turned off” at eligibility for the next available In-Service benefit. For example, if the eligibility for a death benefit begins at 22 years of service, and there is an In-Service benefit whose eligibility begins at 25 years of service, then an automatic “exception” will occur at 25 years of service.
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Decrements: If there are no Pension or Deferred Compensation promises included in the Plan Definition, retirement decrements will not be subject to adjustment for retirement benefit eligibility. That is, retirement decrements will be applied as specified in Valuation Assumptions without regard to retirement benefit eligibility. If any Pension or Deferred Compensation promises are included in the Plan Definition, then decrements will be calculated as described above in the section on Pension and Deferred Compensation promises.
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Post-termination benefits: Benefits in Jubilee promises will be payable only for decrement directly from active service, and no post-termination decrements will be taken into account for these benefits.
Benefit Definitions lists all of the benefits (Benefit Definitions) that have already been identified as a part of this Benefit Promise. The Type column shows the three-letter prefix indicating the contingency under which that benefit is paid: ret, trm, dth, dis or InS (benefit payments to a plan member while in active status). The Modified column shows the date of the most recent modification to the library entry. To edit an existing Benefit Definition or to omit it from the Benefit Promise, double-click the library entry or select the entry and click the Edit button. To create a new Benefit Definition, click the New button. To add or omit several Benefit Definitions at a time, click the Add/Omit button, which leads you to a list of Benefit Definitions unhidden in the current Project. Check off any Benefit Definitions to include in the promise and uncheck any Benefit Definitions you wish to omit from the promise. See Benefit Definitions – pension modes for more information.
If some active or terminated vested records (e.g., for a particular plant location or division) are ineligible for the Benefit Promise, enter a Selection Expression (i.e., a database expression that selects records according to the values in a database field or fields) to specify which records receive this Benefit Promise. Alternatively, you may retrieve a Selection Expression previously saved under the Selection Expressions command of the Database menu. Only records that meet the selection criteria of the database expression will receive the Benefit Promise. If the Selection Expression is blank, all records are considered potentially eligible for this Benefit Promise.
To retrieve a previously saved Selection Expression, click the 
button to access the Retrieve Selection Expression dialog box, which lists the selection expressions saved in the current project. Click the name of the desired selection expression to return to the Benefit Promise dialog box, where the selection expression is now entered in the expression box.
The Benefit Promise date is a database field indicating the effective date of the benefit promise. It is used to determine the Teilwert minimum funding age, legal vesting eligibility, and the legal vesting age for the PSVaG. In Jubilee promises, if Apply German statutory rules is checked in Valuation Assumptions, it is used to determine the first age for which Tax liabilities are measured (11th fiscal year since minimum funding age) and the minimum service requirement for In-Service benefits in Tax liabilities (15 years). See German Teilwert and PSVaG liability calculations for more information.
In Pension and Deferred Compensation promises, the Transfer Value field indicates the database field that contains the transfer value needed for the Teilwert calculation. Choose “<not applicable>” to set the Transfer Value to zero for all participants for this promise.
Select a topic to edit contains entries for two categories of information found in a Benefit Promise. Click the name of a topic to access its parameters. The Benefit Promise topics are:
Vesting Proration Method (Pension and Deferred Compensation promises only)
When participants are eligible for more than one Benefit Promise, all Benefit Promises for which the participant is eligible must be consistent in the following ways:
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The options selected under the Vesting Proration Method topic must be the same.
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The options selected under the Normal Retirement topic must be the same.
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The benefit promise date for the participant must be consistently prior to 2001, between 2001 and 2008 inclusive, or after 2008.