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Core Projection

See also Core Projection Output.

A Core Projection is an interim step required before any Deterministic Forecast or Stochastic Forecast can be executed, a task involving extensive calculations that can take considerable time even on the fastest personal computer (PC). Core Projections are best sent to a batch server, if one is available, so as not to tie up resources on your primary PC during execution. The purpose of a Core Projection is to calculate and store the values of all future plan liabilities under several sensitivities so that forecasts can be run relatively quickly.

During a Core Projection, the plan census data is projected on a year-by-year basis, using the Projection Assumptions with respect to actual experience that the user specifies for the forecast period.

The first dialog box is the library of all Core Projections previously created, if any. An asterisk on a library entry name indicates that the Core Projection has been set up but not yet executed, whereas an entry without an asterisk has been run. You can unhide a Core Projection from another Project, create a new one by clicking the New button or edit an existing one by clicking its name.

The parameters found under the Core Projection command are as follows:

Name is a description for the Core Projection currently being defined. This name will be displayed in the Core Projection Library, so you are encouraged to use a description that will readily allow you or a colleague to understand the underlying nature of the projection.

Valuation Date is the date of the baseline valuation (for the current year, sometimes referred to as Year 0) for the projection, a.k.a. the initial valuation date. ProVal will perform valuations annually, at anniversaries of this date, over the forecast period.

The Populate button allows you to fill in the Core Projection inputs using information from a Valuation within the current Project. Topics that can be populated are Valuation Date, Plan Definition, Funding Assumptions, Accounting Assumptions, Scaling Factors, Census Database, Census Specifications, Selection Expression and any Subtotal Fields. Some inputs still will need to be filled in, including Projection Assumptions, Projection Years and, for open groups, New Entrants.

The Plan Definition furnishes the plan benefit provisions to be used in the valuations performed by the Core Projection. Select from the library of Plan Definitions unhidden in the current Project or click the image/backdoor_button.gif button to create a new library entry. In the pension modes, if you are processing only inactive records (i.e., records with a status field code mapped to a ProVal inactive status), then you need not create, and select, a Plan Definition. Instead, you may select the “<Inactives only>” option, in which case benefit payments are assumed to be paid monthly at the beginning of each month. Note for Core Projections selected as an Override of the baseline Core Projection in a deterministic or stochastic forecast in the Canadian registered pension mode: if there are any Benefit Definitions initiated by the death or disability Contingency included in the Plan Definition of the baseline Core Projection, be sure to include them in the Plan Definition of the solvency override Core Projection. This is because, although active disability and death benefits typically are excluded from solvency liability, solvency calculations typically include the liability for emerging inactive disabled participants and survivors. (Failure to include the same Benefit Definitions in both the baseline and override Core Projections could produce an “inconsistent demographics” warning upon execution of the forecast.)

Valuation Assumptions contains two parameters for specifying Funding and Accounting valuation assumptions, respectively, to be applied at each valuation date in the projection period (baseline valuation date and each forecast valuation date thereafter). Clicking the arrow of the parameter’s drop-down list box displays the library of Valuation Assumptions of the specified type. Select the appropriate Valuation Assumptions for the Core Projection to be performed or click the image/backdoor_button.gif button to create a new library entry. Note that you may specify both funding assumptions and accounting assumptions or you may specify only funding assumptions or only accounting assumptions. You are not required to specify both, but if you specify only accounting assumptions, be sure that your accounting valuations will not need to use values from funding valuation results.

Projection Assumptions is a multi-choice field that displays the library of projection, or actual experience, assumptions, to be applied to each plan year in the projection period. Select the appropriate set of Projection Assumptions for the Core Projection to be performed or click the image/backdoor_button.gif button to create a new library entry.

Projection Years is a text field for the number of years in the projection period, which is limited to 100 years. Because running Core Projections is a time-consuming task, you should not enter more years than the minimum you need to perform the intended analysis. Generally this parameter is coordinated with the number of years you wish to run in the Deterministic Forecast or Stochastic Forecast; for a Stochastic Forecast, you must also coordinate this setting with the number of years of the Capital Market Simulation underlying the forecast.

Note that if, for a forecast, you specify an end of year additional contribution under the Asset & Funding Policy command, this has an implication for the length of your projection period. If N years of forecast results are desired, you must run your Core Projection(s) for N+1 years, because the forecast will calculate this additional contribution amount for the Nth year using experience occurring (the receivable contribution paid) in the (N+1)st year.

The Census Data button accesses parameters to specify the census, or demographic, data applicable for the baseline Valuation Date of the Core Projection. These parameters are discussed in a following section of this article.

The New Entrants button accesses parameters to indicate the new hire distribution, if the Core Projection is to assume that new entrants join the continuing active population during the projection period. These parameters are discussed in a following section of this article.

The Individual Results button accesses parameters to specify any record-by-record results that you wish to save to an output file during execution of the Core Projection. These parameters are discussed in a following section of this article.

The Sensitivities button accesses parameters to specify the extent of the inflation, interest rate and/or, in the pension modes, asset benchmark and lump sum experience interest rate sensitivities that you wish to run as part of the Core Projection. The purpose of the sensitivities is to allow ProVal to change, as accurately as possible, both the economic environment and actuarial valuation assumptions during the deterministic or stochastic forecast. The parameters to define sensitivity are discussed in a following section of this article.

The Sample Lives button accesses parameters for running just a sample number of records through the Core Projection command. These parameters are discussed in a following section of this article. 

Scaling Factors is a pop-up multi-choice field listing all Scaling Factor sets in the library. You can apply Scaling Factors to Core Projection results to adjust for the use of grouped data, match results of another actuary, reflect mid-year data changes, etc..

Note: You can change the scaling factors applicable to a Core Projection without losing the projection results because the scaling factors are not actually applied (and then only optionally) until you view the projection output or reference the scaling factors in a Deterministic Forecast or Stochastic Forecast.

The Run button executes the Core Projection. An indication of what steps are being performed (validating input, processing and writing results), as well as percentage complete and elapsed time, will be shown on the screen during execution. You may wish to validate inputs before running. For example, if you are running the Core Projection overnight, you can avoid finding, when you come in the next day, that the Core Projection either did not run (for example, because some parameter values were missing) or did run but significant data errors made its results unusable. To validate inputs, click the arrow next to the Run button, and then click Validate. ProVal will check to see that all entries are complete and internally consistent; after reviewing the messages, click OK to return to the Core Projection dialog box.

When the Core Projection is complete, a message will appear describing how long the run took, warning messages will appear, and so forth. These "processing messages" can be printed or viewed at a later time by means of the View button. Click the View button to access the View Output dialog box, in which you can select processing message details and also see, and print, some results contained in pre-designed summaries of the Core Projection output. The dialog box’s parameters are discussed in a following section of this article, entitled “Viewing Output”. More extensive and detailed results can be viewed from the Output menu.

If you include more than one Core Projection in a Deterministic Forecast or Stochastic Forecast, please be sure that the parameter settings are consistent among the Core Projections with respect to (in particular): Valuation Date, liability methods (including timing of employee contributions), funding valuation interest rates, accounting valuation interest rates and, in the U.S. qualified pension mode, applicable law. Thus, for example, if you include (pension mode) accounting Cores with different ABO interest rates or (U.S.) PPA funding Cores with different valuation interest rates (such as spot rates for one Core Projection and segment rates for another one), the forecast run will abort.

 

Census Data

The Census Data dialog box contains parameters to specify the census, or demographic, data applicable for the specified baseline Valuation Date of the Core Projection.

Database File is a multi-choice field that displays all of the database files under the current client, from which you can select the appropriate file for the Core Projection. Note that you can use a selection expression (see below) to obtain a subset of this file, if appropriate.

Census Specifications is a multi-choice field that displays all of the available Census Specifications, from which you select the one appropriate for the Core Projection to be performed or click the image/backdoor_button.gif button to create a new library entry.

Check the Use data defaults box to apply any Defaults that you entered under the Data Defaults topic of the Census Specifications for missing (or, perhaps, “zero-filled”) data to records in the Census Database File. If you included Data Defaults in the Census Specifications referenced by this Core Projection but did not check the Use data defaults box, the default values will not be used when the Core Projection is run.

Selection Expression is a multiple-line text field in which you can construct an expression that selects a subset of the records in the database file to be used in the Core Projection. The selection expression can be entered directly or you can use the image/selection_expression_button.gif button to select an expression previously defined and stored in this library. After completing the Retrieve Selection Expression dialog box, return to the previous box by clicking the Exit button. Note that the selection expression is evaluated before data defaults are applied, therefore records that meet the expression only after application of data defaults will not be selected.

Use of the Subtotal fields parameter is optional. All of the coded database fields in the selected database will be listed. You may select any coded field(s) for subtotaling results of the Core Projection run. For example, if the census database file has a "Company Division" code, you could check this field name to see separate subtotals of results by division. Note that you do not need to select the status field to see separate results for each ProVal status, because ProVal provides results by ProVal status automatically. If, however, you have more than one status code mapped to a particular ProVal status, then, to see separate results for each status code, you should select the status field for subtotaling.

You can exit the Census Data dialog box using either the OK or the Cancel (or Esc) button. OK saves any changes you may have made. If you have made changes, Cancel exits without saving them after receiving an affirmative response to the warning question "Are you sure you want to LOSE ALL CHANGES?"

 

New Entrants

The New Entrant Specification dialog box contains parameters to specify the new hire distribution, if the Core Projection is to assume that any new entrants join the continuing active population during the projection period. ProVal will bring new entrants into the plan, as necessary to meet the growth assumption entered under the Active Population Growth topic of the Projection Assumptions. Note that these new hires are subject to the eligibility conditions for plan participation indicated by the inclusion parameters of the Other Valuation Parameters topic of Valuation Assumptions and thus might not enter the plan immediately at hire.

The Database File parameter displays the names of all of the databases that exist in the current client. Select the database that represents the new entrants to be brought into the Core Projection, as necessary, at each forecast valuation date. This file should not be the same file that is referenced by the Database File parameter in the Census Data dialog box (a.k.a. the census database), although the records contained in the new entrant database may have been obtained from the recent hires contained in the census database.

Check the Use data defaults box to apply any Defaults that you entered under the Data Defaults topic of the Census Specifications for missing (or, perhaps, “zero-filled”) data to records in the New Entrants Database File. 

Specify the database fields that define settings for the:

Unless the Core Projection references a Custom Operator that has multiple Salary Definitions, you can Override salary definitions with a Current salary field. This field value will be used in place of the current salary field value of every Salary Definition (i.e., it overrides the current salary as of each forecast valuation date in the Core Projection). If you select No overrides, ProVal will look on the new entrant database for the current salary field(s) indicated by the Salary Definition(s) referenced by this Core Projection. In either case, the field value on the new entrant database is associated with the specified initial Valuation Date; a new entrant’s salary will be increased with cumulative salary inflation (but not the salary increase indicated by the salary merit scale) for each year of experience up to the forecast date of hire.

For new entrants, generally, for all types of service (hire, participation, benefit accrual, attribution, etc.), you want to Override service-related fields with 0 or 0.5 years of Service at entry. Future service will be assumed to accrue at 1 per year. However:

In all pension modes, you may select a database field which contains the Asset transfer at entry for your new entrants. A new entrant asset transfer amount will be calculated based on this database field, as increased to each entry year by the increase rates parameters in Projection Assumptions. This amount will then be added as a transfer into the assets immediately prior to the new entrant's entry year in a forecast.

Selection Expression allows you to construct an expression that selects a subset of the records in the database file to be used for new entrants in the Core Projection. If the Static option is selected, the same subset will be used for all entry years. The expression can be entered directly into the multiple-line text field or you can use the Selection Library button to select an expression previously defined and stored in this library. Selecting By entry year, will make available a grid in which to enter single-line expressions that vary based on the entry year. Complete a row for each expression. For example, if the valuation date is 1/1/2014 and the expression is "code=1" for new entrants entering in 2015 and "code=2" thereafter, then enter

From To Selection expression
-- 2016 code = 1
2016 -- code = 2

ProVal fills in the To column automatically, and the last expression will be used for the last year entered and all years thereafter. Note that the From box in the first row cannot be completed. Our example involved only two expressions: if you have additional expressions, you may need to press the ENTER key, to create a new row, when you get to the bottom of the spreadsheet.

Note that the selection expressions are evaluated before data defaults are applied so records that meet the expression only after application of data defaults will not be selected.  Also, if a year's selection expression results in no records selected, ProVal will abort the run.  Therefore, to "shut off" new entrants in a future year, set a negative increase rate for the appropriate year under the Active Population Growth topic of Projection Assumptions. 

After completing the New Entrant Specification dialog box, return to the Core Projection dialog box by clicking the OK button.

 

Individual Results

The Individual Results dialog box contains parameters to specify any record-by-record results of the initial population that you wish to save to an output file during execution of the Core Projection. Please note that Individual Results will apply all data defaults that you entered, for missing data, under the Data Defaults topic of the Census Specifications command, if the Use data defaults box is checked (found behind the Census Data button, as previously discussed).

Check the Save Individual Results for the initial population (baseline sensitivity) box to indicate to save results, on a record by record basis, in a ProVal database file. Then the remaining parameters, which provide such information as which output variables to save, become accessible.

Specify the Projection year for which individual results are to be saved. An entry of 0 will save results as of the initial valuation date, a.k.a. Year 0. Enter a value greater than 0 (e.g. N), if it is desired to save results for the Nth projection year.

Results are only available for the Baseline Sensitivity, and only for the current population. New entrants are not processed.

Select the Database File Name of the ProVal database file in which you wish to store the individual record results of the Core Projection run, or click the New button to create a new database file in which to store the output (referred to in the remainder of this article as the Individual Results output database). Note that you cannot save the results directly in the Census Database File that is accessed to provide the Core Projection’s input data values, although you can merge results into the Census Database File afterwards by using the Merge Data command of the Database menu.

Specify the Key field(s) to use in matching records, for example, employee identification number, (U.S.) social security number. Select from the list of database fields (only the fields contained in the Census Database File that has been specified for this Core Projection appear in the list). The field(s) should be the key field(s) that you will (later) use to match output file records containing new data (saved, as individual results, from the Core Projection run on a record-by-record basis) with the records in the (input) Census Database File. Although it is common to use an employee identification number (or, in the U.S. qualified and U.S. public modes, to use social security number) as a key field, you may select any of the five types of database field. The combination of key field(s) must be unique for all records, that is, no two records should have the same set of key field values (no duplicate keys).

The Match case in key option determines whether ProVal should, for example, treat "a" differently from "A" when these characters are encountered. For case-sensitive treatment, check the box.

Check the Delete all existing records before processing box if the selected Individual Results output database file already contains records with field information and you wish to "wipe the slate clean" and save results to a file without saving existing records or database field values.

The Individual Results parameter lists the output variables selected for saving, on an individual record basis, to the selected Individual Results output database. The List parameter provides the option to display only a subset of the selected output variables. Change the List selection from “All” to one of the other options to contract it to show only variables produced from the funding Core Projection run (“Funding”), only variables produced by the accounting Core Projection run (“Accounting”) or only the fields contained on the Census Database File selected for this Valuation library entry (“Additional Fields”).

Click the Add/Omit button and then click one of the categories of variables whose output values can be saved to the Individual Results output database:

Selecting one of these categories produces a list of all of the related variables that can be selected to be saved. Each item in the list of variables (under the Select items to include parameter) consists of the variable’s database field name and description. ProVal selects the database field name for those variables that are always included in the selection screen (because they are "standard" output items, for example, cost method liabilities); however, for those variables that are a function of, for example, benefit formulas, the database field name appears as "<none>".

For funding and accounting Individual Results output variables, there are up to four parameters that allow you to expand or contract the list:

1) a check box for selecting benefit details:

2) a button for selecting which benefits to show on the list. Check the Show benefit detail box (Show benefit promise detail box in German mode) box, to make the Benefits  (Benefit Promises in German mode) button accessible., and click it to enter the Benefits dialog box, which allows you to select the Benefit Definitions (Benefit Promises in German mode) you would like in the list of output variables.  Reducing the size of this list may make it easier to browse through it and select the desired output.  In certain cases, a "benefit definition type" will be included in the list under Select benefits for detailed output when no individual results output is directly available but underlying Benefit detail is available.  These special types are Contribution Policy Data (listed with the prefix "Fdg"), in all modes except OPEB and German, Insurance Reserves (listed with the prefix "Ins") in universal mode, and, in OPEB mode, Lifetime and Annual Limits.       

3) a drop-down list box for selecting the types of output variables to display in the list. Change the List selection from “All” to one of the other options to contract it to show, for example, just “Normal Costs” (that is, no actuarial accrued liability, no present values, no demographic items and no information about benefits). The options that omit some output variables from display are:

For the record's status field code, there are two demographic variables, zNSTC and zNSTC_actg, for funding and accounting results, respectively.  If these variables are selected, the contents of the Output database field will be based on the ProVal status code mapping, as follows:

retired  4
vested  6
disabled  8
survivor 10 
non-participating 12 
vested valued as active  13 

Similarly, for the record's sex field, there are two demographic variables, zSEX and zSEX_actg. These variables have codes of 1 for males and 2 for females, unless a numeric field (containing the percentage of the record that is male) was selected in the Census Specifications to indicate the record's sex.

zPROJYR for funding, and zPROJYR_actg for accounting indicate the Individual Results Projection year selected for the record-by-record output.  If for example, "0" was selected, and the Core Projection Valuation Date was 1/1/2017, zPROJYR will contain the value 2017. Alternatively, if "5" was selected for the Individual Results Projection year, zPROJYR will have a value of 2022.  

If the plan contains any termination benefits commencing "at post-termination retirement age", there is a field available to specify the Post-termination retirement age. This will be used as the retirement age when determining any accrued benefit amounts for these benefits.

Select a variable to save by checking the box next to its name and/or description. Click OK to return to the Individual Results dialog box, where the selected variables now appear in the Individual results list.

Some variables do not have field names determined by ProVal (the field name appears as "<none>"). Others may have names that you prefer to change. To assign or specify field names for the display of Individual Results output variables contained in the Individual Results Output database file, click the Field Names button. ProVal displays all of the Funding and Accounting variables selected to be saved as individual results (i.e., on a record-by-record basis). (You may not edit names of any Additional Fields selected from the Census Database File, which fields will retain, in the Individual Results output database File, the names they have in the Census Database File.)  Double-click the row (or select the row and click the Edit button) containing the output variable you wish to name or rename. In the ensuing dialog box, if the output variable already has a name, that name will be shown in the text field for the New field name parameter. If the variable does not yet have a name (i.e., “<none>” was shown in the list), the text field for the New field name parameter will be blank. You may specify a New field name (and ProVal will create a new database field for this output variable when the Core Projection is run) or you may pick the name of a Database field that already exists in the Data Dictionary. If you provide a new field name, you may also edit the suggested field Description (optional phrase that describes the contents of this field) and Column title (to be used for display of the field value in a table or list) and/or change the Formatting style, which sets the field width, number of decimal places and presence of dollar signs and/or commas for display purposes only. (Note: the data is stored to full precision regardless of the formatting style.) Click OK to return to the Edit Field Names dialog box, where the specified field names and descriptions now appear in the list of output variables. Click OK again to return to the Individual Results dialog box, whose list of selected Individual results output variables is now modified by your field name and field description specifications.

A check in the Save liability pre/post decrement detail box will generate additional detail for liability results, when applicable. Enter suffixes in the Append suffix to continuing active field names (e.g., _C) and Append suffix to emerging inactive field names (e.g., _E) boxes for ProVal to append to the specified field names to indicate that the result is for pre/post decrement detail. These results are available for projection years other than the valuation year.

Sensitivities

The Sensitivities dialog box contains parameters to specify whether inflation sensitivity, interest rate sensitivity and/or, in the pension modes, asset benchmark and lump sum experience interest rate sensitivity should be run as part of the Core Projection. The purpose of the sensitivities is to allow ProVal to change both the economic environment and actuarial valuation assumptions during both deterministic and stochastic forecasts. For this purpose, the Projection Assumptions must contain the values ProVal should use under the various scenarios. For the baseline interest rate scenario, ProVal takes interest rate values from the selected funding and/or accounting Valuation Assumptions library entries. Enter inflation, asset benchmark, and all other interest rate values (including all lump sum experience interest rate values) for the various scenarios under the following topics of your Projection Assumptions:

Sensitivity Dimension Topic
Inflation & asset benchmark Increase & Crediting Rates (in OPEB mode, Increase Rates)
interest rates Valuation Assumption Sensitivities
lump sum experience interest rates Lump Sum & Optional Payment Forms

Note that, although the values of interest rates and inflation-related parameters are specified in the Valuation Assumptions and the Projection Assumptions, the selection of which sensitivities to run is made by your settings for the Inflation & Asset Benchmark Sensitivities, Interest Rate Sensitivities and Lump Sum Experience Interest Rate Sensitivities parameters. For each sensitivity dimension, you may select All, in which case ProVal will run the low, and high scenarios along with the medium or baseline scenario. Alternatively, for inflation & asset benchmark, you can select just the Low, Medium or High scenario; for interest and lump sum experience interest, you can choose just the Baseline scenario. The asset benchmark sensitivity will only be run if there are cash balance accrual definitions, Universal mode career average accrual definitions with indexation or employee contributions that vary with an asset benchmark, as specified in the Projection Assumptions.

A full projection is run for each sensitivity dimension specified and up to three sets of results are produced for a single sensitivity dimension, five for two sensitivity dimensions, seven for three sensitivity dimensions, and nine for all four sensitivity dimensions. Running all sensitivities will be fine in most cases; thus the pre-set options (of a new Core Projection) are set to All. As an (isolated) example of a case where you should consider changing the sensitivity settings, consider a very large plan for which you want to run a baseline Deterministic Forecast only. In this case, to save time, you might consider running just the medium inflation scenario with baseline interest rate and baseline lump sum interest rate sensitivities, because the scenario will run much faster than if all sensitivities are chosen. However, you are advised to run scenarios with all sensitivities even if you are seeking only a single specific projection scenario (such as in the example above). This is because, once you have realistic scenarios, you will always have a basis, without rerunning the Core Projection, for any other results you may later desire to model in a forecast. Additional considerations for selecting sensitivities are discussed in the Frequently Asked Questions article entitled “Selecting sensitivities in a Core Projection”.

Answer the Calculate Projected Benefits question, separately for Funding and Accounting valuations. For each valuation that the Core Projection will perform over the projection period, you may have ProVal calculate expected benefit payments (on various liability bases, for all sensitivity dimensions) as of the valuation date and “projected” to future decrement dates and payment dates. The available liability bases depend on whether the valuation is of the funding or accounting type, on the ProVal mode of operation and, in the U.S. qualified mode, on the applicable law type. For each of the three possible sensitivity dimensions (two in OPEB mode), there are three options:

After completing the parameters in the Sensitivities dialog box, return to the Core Projection dialog box by clicking the OK button.

 

Sample Lives

Click the Sample Lives button to access parameters that allow you to run a sample of records through the Core Projection command and display sample life results, to help verify Core Projection results. In general, the sample life tables are directly comparable to those available for Valuations, albeit with “historical” information and valuation assumptions consistent with the Core Projection sensitivity.

You construct a Selection Expression (applied after census expression), such as RecID = 10, and choose whether to Process sample lives from (run a record from) the Census data (current population) or from the New entrant data. If the latter, specify the hire year, which is the valuation year in which the selected new entrant records are assumed to be new hires. After the Selection Expression behind the Census Data button is evaluated, the Selection Expression here picks out the subset of the records in the selected database file to process as sample lives in the Core Projection. The Selection Expression can be entered directly or you can click the image/selection_expression_button.gif button to select an expression previously defined and stored in the Selection Expression library. In addition, you may change the maximum number of sample lives to be processed (“process no more than 20 selected records”), up to 20. This feature allows you to use the Selection Expression to choose the general type of participant you want to study (e.g., Location = 3), and then automatically limit the number selected to 1 or more. If you enter, for example, “10”, ProVal will select the first 10 records that meet the criteria of the Selection Expression. If the Selection Expression is blank, the Sample Life command will operate on all records in the selected database, up to the maximum number specified for processing. Note that if you are running a sample of the new entrant data, it may be easier to understand the results if you select only one record at a time, because the count for new entrants is always adjusted such that the total count for all new entrants is one (1). (See below for more information about new entrant sample lives.)

A Core Projection will be run, using just the selected records, Based on a single set of valuation assumptions, either Funding Assumptions or Accounting Assumptions, and a single Sensitivity Scenario for each Core Projection sensitivity dimension: Inflation, Interest, Lump Sum Experience, and Asset Benchmark. Note that you have a choice of either Funding Assumptions or Accounting Assumptions, unless one is inaccessible because its type is not specified in the (main) Core Projection dialog box. The available sensitivity scenarios depend in part on the settings you’ve selected for the parameters of the Sensitivities dialog box, accessed via the Sensitivities button of this Core Projection library entry.

To process the chosen sample lives, click the Run button and then click OK to view the results. Once the sample lives have been run, the available selections for sample life output to display are essentially the same as that for Valuations except for a few extra choices. The following are some idiosyncrasies specific to Core Projection sample lives:

  1. Except for input data, the summary results reports, and the Solvency Incremental Cost report in Canadian mode, the sample life results are displayed in tables that depend on the year of the valuation date, and whether it is the initial, or baseline, valuation date of the Core Projection (particularly for new entrants) or a future valuation date during the projection period. Therefore, for most reports, the valuation year to display must be selected (to indicate for which valuation date to display results); select the valuation year from the dropdown list at the top of the Sample Life Output screen. You will cycle through this screen and the sample life reports (tables) if you want to examine detailed results for more than one valuation year. The tables show the valuation year selected after the record identifier. For the initial valuation year (baseline year of the projection), the Benefit Definition and Decrements sample life tables are identical to those shown for Valuations.

  1. The tables distinguish between an initial Active, an Emerging Inactive and an initial Inactive. Emerging inactive tables detail the inactive liability for participants who were active at the initial valuation date (baseline valuation date) but then subsequently decremented and are inactive as of the valuation year to display. The emerging inactive sample life tables for liability methods, unlike the liability method tables for actives and initial inactives, are unique to Core Projections and thus not available in Valuations. No emerging inactive liability tables are available for the initial valuation year, by definition, because no actives have yet decremented. In later valuation years, a table is available, for each active Benefit Definition (benefit), for each participant who had met the eligibility requirements for the benefit during some valuation year prior to the year selected. If a record does not meet the eligibility requirements, a message is produced rather than a table. If a record does meet the eligibility requirements and was assumed to partially decrement in each of the prior valuation years, then each of those occurrences of decrement contributes to the current valuation year’s emerging inactive liability for that benefit. For each valuation year selected for display (aka the current year), the table displays values in columns for each decrement year and generates the number of inactives and the liability amount associated with each past decrement year. ProVal totals these inactive participant counts and emerging inactive liability amounts over all past decrement years to derive the total counts and liability amounts, respectively, associated with that benefit. For example, see the display for recid #4, who was eligible for a benefit and assumed to partially decrement in each of the 2007 through 2009 valuation years; the decrements of each of those three years contributed to the 2010 emerging inactive liability for this benefit: image/ebx_-867820823.gif

RecID #4 had a count of 2 participants age 58 in the initial 2007 valuation year, with a retirement decrement probability of 4.97%. Those decrementing actives had a 96.4% probability of surviving in inactive status to the 2010 valuation year, resulting in a total of 0.095924 inactives at 2010 from the 2007 retirement decrement for this record. At decrement, the benefit (verifiable from the Benefit Definitions sample life tables) was $17,703.50. In our example, there is a 0% COLA assumption and the benefit is still in payment status (i.e., it was not a lump sum or a temporary annuity whose temporary period had expired), so the benefit in 2010 is still $17,703.50. The payment form value at the valuation year typically will be the same regardless of the year of decrement, because typically it is an immediate annuity. For our example, however, we defined the payment form of this Benefit Definition as an annuity deferred for 3 years, so the values of the “Payment form value at 2010” differ among the decrement year columns, reflecting the differing deferral periods at each time of decrement.

Note that these emerging inactive results can be verified by running a Core Projection with a single active record in the census database and no new entrant database selected. The inactive results, available under the Output pane and detailed by inactive status code, should match the Total column of the emerging inactive sample life tables.

  1. There are two sets of active summary results tables: standard and “normalized.” The standard Summary Results table is designed to match the Core Projection results that you would see, under the Output pane, if you ran a single record with no scaling factors. The results reflect the initial value of the field named Count, as well as the probability of survival to each future valuation date. The Normalized Summary Results for active participants ignore these two items; they show the results as if 100% of the person survived and remained active for each future valuation year. These normalized tables allow you to see the relative value of liabilities as the participant ages and his/her service and salary increases.

The presentation of some of the sample life reports is also modified depending on (1) whether there are any Plan Amendments for any Benefit Definition(s) and (2) for an active sample life, whether the sample life is an initial active or a new entrant:

  1. Plan amendments can come into play during a Core Projection and have been addressed in the sample lives. The information displayed depends on whether the valuation year is before, during or after the year of amendment. For example, the following illustrates an “amendment benefit”, the Benefit Definition to which a Benefit Definition in the Plan Definition will be amended during the projection period, for a valuation year prior to the year of the amendment. The “Projected Benefit” column is footnoted because it does not represent the results of the formula shown. Rather, it shows the values of the associated pre-amendment Benefit Definition. image/ebx_-1788882190.gif

In the year of amendment, both the pre-amendment and post-amendment Benefit Definitions will have asterisked Projected Benefit columns. In this year and all later years, the final projected benefit for the initial Benefit Definition will be coerced to reflect the post-amendment values. (The details of this calculation are available by looking at the Benefit Definition for the amendment benefit.) The illustration below is of an original Benefit Definition on or after an amendment year. image/ebx_-848924908.gif

In the amendment year, the present value of benefits and/or liability will be calculated for the amendment Benefit Definition and asterisked as illustrated below. The projected benefit for this calculation is the pre-amendment benefit, as noted on the Benefit Definition sample life table, so this calculation represents the pre-amendment liability. image/ebx_1132814397.gif

  1. The sample life tables for new entrants are identical to those for initial actives except that they are available only for the period from the year of entry to the final year of the projection period. One item unique to new entrants (which you can examine in these tables) is the input data versus the age and salary of the new entrants as they enter over the course of the projection period. You should note that the entry age for the new entrant remains constant regardless of the year of entry and that the salary at hire increases from the input data value, in accordance with the experience salary inflation assumption (but not the merit scale).

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Note that it is not possible to display the “actual” number of new entrants, because that would require a process that is beyond the scope of the sample life reports, namely a complete forecast of the number of initial actives remaining each year, in order to determine the number of new entrants required each year to satisfy the population growth assumption. Accordingly, regardless of the number of new entrant records selected by the Selection Expression, the total count for the sample lives will be “normalized” at 1. Thus if for each record the initial value of the field named Count is 1 and you run two records through the sample lives, each record will have a sample life count of 0.5. If you run three records with an initial value of 1 in the Count field, each will have a count of 0.3333. If the value of the Count field is other than 1, however, such as 0.3 for a 25 year old and 0.1 for a 50 year old and these two records are both selected, the sample life count will be normalized, per the Count field, to 1, so that the count for the 25 year old will be 0.75 and the count for the 50 year old will be 0.25.

Similarly, it is not possible to display the "actual" new entrant hours if new entrant hours are adjusted to keep hours growth consistent with population growth.Therefore, new entrant sample lives will be run with the hours specified on the new entrant database file.

For more information about the Sample Life Output screen, its panes and its buttons, see the discussion of sample lives under the Valuations command.

After reviewing the output, you can exit sample life processing by clicking the Close button of the Sample Life Output screen and then the Exit button of the Sample Lives dialog box.

 

Viewing Output

The View button displays summary output, along with inputs and processing messages. Click the Options button to:

Alternatively, you can create customized output by using the Output pane (on the right side of ProVal’s main window).