In a Benefit Component Table, you may generate annuity present values at various lookup ages and store the values in the table by selecting the Calculate Annuity Factors command after clicking the Options button. Parameters are available to specify, for a single life annuity, an interest rate, a mortality rate table, when payments start and stop, payment frequency and timing, and optional COLA rates. There are additional parameters, accessed via the J&S Annuities button, for a joint life annuity; these parameters specify the contingent annuitant’s (beneficiary’s – assumed to be the spouse) mortality rate table, the fraction of benefit payable under each possible survival status, the age difference between husband and wife, and the fraction of the population receiving the joint life annuity.
The first dialog box of the Calculate Annuity Factors command contains the parameters for calculating single life annuity values. Select the (primary annuitant) Mortality rates from the list of mortality rate reference tables in the current Project. To modify a table in the list or create a new one, click the 
button to access the Mortality Rate Table library.
Note that:
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The mortality table must be of the attained age or age by pre/post commencement types.
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If you are creating a new table and have chosen the “unisex” option for table type but select a sex-distinct mortality table (or a table with sex-distinct improvement scales), ProVal will calculate both male and female rates and convert your selection to a sex-distinct table. Similarly, if you are creating a new table and have chosen the “sex-distinct” option for table type but select a unisex mortality table (without sex-distinct improvement scales), ProVal will calculate unisex rates and convert your selection to a unisex table.
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Annuity values will be generated only for lookup ages in the range of the table; this range is defined by the “Row & Column Limits” command of the Options button.
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If you select a dynamic or fully generational mortality table, the Valuation year parameter becomes accessible. This is the 4-digit calendar year (which can be after, the same as or before the base year of the mortality table) that lookup ages will be associated with. For example, to calculate a life annuity present value as of age 65 in the year 2000 based on mortality rates of the Uninsured Pensioner 1994 Table projected by Scale AA, select “UP-1994 Table with Projection Scale AA” for Mortality rates and enter “2000” as the Valuation year. ProVal will compute the desired present value using an age 65 mortality rate improved 6 years by Scale AA to the year 2000, an age 66 mortality rate improved 7 years to the year 2001, and so forth. (Similarly, ProVal will compute a present value as of age 64 using an age 64 mortality rate improved for 6 years to 2000, an age 65 mortality rate improved for 7 years to 2001 and so forth.) For details about application of projection scales to mortality rates in dynamic tables, see the Technical Reference article entitled Mortality improvement (generational mortality).
The Interest rate used to discount annuity payments to the table lookup age may be a Static rate (the same rate for all years between each payment age and the lookup age), a Variable rate (the rate depends upon the duration from the lookup age to the year associated with the interest rate) or PBGC-style rates. Enter an interest rate as a number between zero and 1 (not as a percentage). For variable rates, you may further specify whether the rates are forward rates (i.e., any specified rate is used for discounting at the specified duration, measured from the decrement date, for all benefit payments made at or after that duration) or spot rates (i.e., any specified rate is used to discount a benefit payment made at that duration for the entire period between decrement and payment).
To define variable rates, click the Rates button and fill in the spreadsheet in the next (Variable Interest Rate) dialog box. Complete a row for each interest rate. For example, if the interest rate is 5% for all durations until 10 years after the lookup age (the durations – that is, years elapsed since decrement – are 0, 1, 2, …, 9), 6% for the next 10 durations and 7% thereafter, then enter
| From | To | Rate |
| -- | 9 | 0.05 |
| 10 | 19 | 0.06 |
| 20 | -- | 0.07 |
ProVal fills in the To column automatically and the last rate will be used for the last duration entered and all durations thereafter up to the payment age. Note that the From box in the first row cannot be completed. Our example involved only three interest rates: if you have several interest rates for the period between payment age and lookup age, you may need to press the ENTER key, to create a new row, when you get to the bottom of the spreadsheet.
The third choice (PBGC-style rates) is a set of four interest rates, each one applicable for a different period between payment age and lookup age: during the annuity payment period; for 7 years prior to the annuity commencement age; for the previous 8 years prior to the annuity commencement age; and during the period between the lookup age and 15 years prior to the annuity commencement age. That is, this option associates the interest rates by measuring duration backward from commencement age to lookup age, rather than forward from lookup age to payment age. To view, within ProVal, a list of PBGC interest rates, by calendar month and year, go to the Mortality and Interest Rates topic of the Administration Factors command of the Tools menu.
Indicate benefit Deferral by entering either the payment commencement age or the length of a deferral period for payments that do not commence immediately. Select none for immediate benefits. If a deferred benefit is specified, an immediate benefit will be valued for a lookup age older than the commencement age.
The Certain period is defined by indicating the length of the certain period or the age at which it expires (i.e., the first age at which a payment is no longer certain to be made, regardless of whether the member is alive). ProVal begins the certain period at the annuity commencement age indicated by the Deferral parameter. If the certain period is to expire at an age attained at or prior to the commencement age, then the annuity will have no certain period.
Indicate that a benefit is Temporary by entering the length of the payment period or the age at which benefits cease (i.e., the first age at which the participant no longer receives a payment). ProVal begins the temporary period at the annuity commencement age indicated by the Deferral parameter. If the cessation age is attained at or prior to the commencement age, then the annuity value will be zero.
Payment frequency specifies how many payments, in equal installments, will be made throughout the year. Regardless of your selection for this parameter, ProVal computes annuity values for a total annual payment of $1. See Present Values: Benefits payable (m)thly for details about how this parameter is used.
Payment timing indicates payment at the beginning or end of the payment period defined by the Payment frequency parameter. Select “Beginning of period” for an annuity-due or “End of period” for an annuity-immediate.
You may apply cost-of-living adjustments (COLA’s) to the payments. The COLA rate during payment period is used to increase benefits after payment has commenced, while the COLA rate during deferral period is applied from the lookup age to the payment commencement age. If the annuity does not have a COLA, then code the parameter(s) as zero.
If you are calculating values of a joint life annuity, click the J&S Annuities button, to access the additional parameters in the J&S Annuities dialog box. Initially, the Beneficiary mortality rates are set at “<None>” and the other parameters are inaccessible. When you select a beneficiary mortality rate table from the list of tables in the current Project, ProVal understands that you are generating values of a joint life annuity and thus the remaining parameters become accessible. (Note: if you are calculating values of a single life annuity, the Beneficiary mortality rates must be set at “<None>”.) As for primary annuitant mortality, the beneficiary mortality table must be of the attained age or age by pre/post commencement types.
The contingent annuitant’s mortality table need not be same as the primary annuitant’s mortality table. (Calculation of values of a joint life annuity for disabled members with presumed healthy spouses is an example of a situation where the need for different member and beneficiary mortality rates arises.) In particular, the tables may differ with respect to the sex dimension. If they are unisex and the same, with no age set back applied, then the resultant annuity values will also be unisex. Otherwise, the resultant values generally will be sex-distinct, regardless of whether you specified a unisex or sex-distinct “Table Type” to contain your annuity values. ProVal will compute according to your choice of parameter settings and adjust the table’s unisex/sex-distinct setting, if necessary. Select the Beneficiary mortality rates from the list of mortality rate reference tables in the current Project. To modify a table in the list or create a new one, click the button to access the Mortality Rate Table library.
The Fraction of Joint & Survivor benefit received when parameters (Both member and beneficiary are alive, Only the member is alive, Only the beneficiary is alive) are used to describe joint and survivor payment forms. If, for example, 1, 1 and 0.5 are entered for these parameters, then the payment form will be a 50% joint & survivor annuity (i.e., 1 paid when the member is alive and 0.5 paid when only the beneficiary is alive) for the fraction of the population receiving a joint and survivor annuity and a life annuity for the rest. The Number of years husband is older than wife parameter value is specified separately for male and female members and is used to determine the appropriate ages for beneficiary mortality table lookups. Because the beneficiary is assumed to be the member’s spouse, the sex for beneficiary table lookups is always the opposite of the member’s sex. The Fraction of population receiving J&S parameter value also is specified separately for male and female members. Enter the fraction as a number between 0 (none receiving a J&S annuity) and 1 (all receiving a J&S annuity). When this fraction is less than 1, some members are valued as receiving a single life annuity and ProVal blends the J&S and life annuity factors (not the underlying mortality rates).
Check the Calculate J&S conversion factors (i.e., Life Annuity / J&S) box to calculate – instead of J&S annuity present values – the J&S conversion factors from an assumed life annuity normal form (with no deferral, certain or temporary periods) to a joint and survivor annuity form. Note, however, that any deferral, certain or temporary period specified in the prior dialog box (Calculate Annuity Factors dialog box) are assumed to apply to the joint and survivor annuity to which you are converting.
For more information, see the Technical Reference article on joint & survivor payment forms.
When all parameters are entered, click OK to exit the dialog boxes; ProVal will calculate annuity values and populate the Benefit Component Table with them. If the table already contains values, ProVal will warn you that your calculation will replace values currently in the table. To exit the Calculate Annuity Factors dialog box (or the Joint & Survivor Annuities dialog box) without replacing the current values, click Cancel.