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Decrement Tables

Mortality, Disability, Termination and Retirement Rates

“Decrement” refers to the way that a plan participant’s status changes. Active participants (i.e., the database record’s status is mapped to ProVal’s active status) are potentially subject to four types of decrement (contingencies): death (mortality), disability, termination, and retirement. Inactive participants (i.e., the database record’s status is mapped to a ProVal inactive status or the “hybrid” “Vested valued through active” status) and active participants after a decrement from active status has occurred are subject only to mortality. (For more information, see the Status Code Mappings topic of the Census Specifications.)

All types of decrements are entered through the same (table) interface. For active participants, the rates of decrement may vary by age, service, age and service (i.e., the table is select and ultimate) and sex. For inactive participants, the rates may vary by age and sex. Furthermore, you may apply improvement scales to mortality rates and mortality rates at the same age may differ according to whether the participant’s annuity payments have commenced. Different improvement scales can be applied to periods before and after the participant’s annuity payments have commenced and improvement scales can be applied with generational projection or to a fixed end year. For more information, see Mortality Improvement Scales. For both active and inactive participants, mortality rates for any age may vary with the participant’s year of birth; this “age by year of birth” option is available also for disability rates (which currently apply only to active participants). See Table Interface for details about constructing tables and entering their values.

When an age by pre/post-commencement mortality table is specified in the pension modes, ProVal uses the pre-commencement mortality probabilities during the deferral period, as defined by the payment form for each benefit (i.e., each active Benefit Definition and each Inactive Benefit), and post-commencement mortality thereafter.

For some purposes, ProVal uses the “overall” mortality for a participant with respect to the aggregate of all of the participant’s benefits. For example, if there are multiple benefits for a particular decrement cause and decrement age (e.g., both a monthly pension/annuity and life insurance coverage are provided upon retirement), the participant is deemed to have commenced receipt of benefits, in the aggregate, if any of his/her annuity benefits have commenced as of the valuation date. In this situation, the “aggregate” definition is used to select mortality rates (pre-commencement versus post-commencement) for purposes of determining life expectancy, pension head counts for display purposes and, in a Core Projection, the proportion of initial inactive participants (i.e., the record’s status is inactive on the initial, or baseline, Valuation Date) assumed present on each future valuation date (aka initial inactive experience head counts). Mortality for decrementing active experience head counts, by contrast, is determined on a benefit by benefit basis. That is, the proportion of active participants (whether present on the initial Valuation Date or new entrants who came into the plan afterwards) assumed present on each future valuation date is determined using, perhaps, both a pre-commencement and a post-commencement mortality rate at the same age, depending on the benefit that will be initiated at that age.

All retirement rate tables must contain the value “1” at some age (called the “100% retirement age”) under age 101; termination rate tables may contain a “1” before this retirement age.

Different rate tables may be used for different calendar years of decrement or different tables may be selected for different values of a coded field in the database. See Additional Decrement Parameters, under the Decrements topic of Valuation Assumptions, for details about decrements that vary by calendar year or according to the contents of a coded field.

The following mortality tables are automatically included in an existing ProVal client, when the client files are updated, and in every new ProVal client. The name of each begins with the abbreviation of its issuing body (e.g., "SOA").  The tables may be hidden from the current Project; click the Unhide button to gain access. You cannot erase, or save changes to, mortality tables that are automatically included in a ProVal client. The following tables are currently available:

The following tables are base rates only as published by the CIA Pension Experience Subcommittee February 2014 and do not have the improvement scale or any size adjustment factors built in.
The following tables are linked to the relevant base rates and include the applicable improvement scale.  Note that size adjustment factors, as published by in the CIA Pension Experience Subcommittee February 2014, have been pre-filled in under the mortality linkage advanced parameters.  If you wish to apply them, select the radio button to apply a database field adjustment factor, check the box to transform the values based on the spreadsheet provided.  Because the table is protected, the resulting table with size adjustment factors must be saved under a new name.

The decrement tables that you enter may contain either rates or probabilities. For details, see the Technical Reference article entitled Decrements: rates vs. probabilities.

ProVal looks up table values based on the participant’s age and service as defined by the date of birth (or attained age) and date of hire (or hire age) parameters, respectively, of your Census Specifications. The former parameter applies to both active and inactive participants. The latter parameter applies only to active participants. Furthermore, an active participant’s service is computed as the difference between attained age and hire age. Age and service for table lookups are always computed as whole (not fractional) numbers. For details, see Active Data , Inactive Data - pension modes and Inactive Data - OPEB mode.

A decrement table may be used in conjunction with post-decrement probabilities to separate the cause of decrement into component causes. Consider a situation in which service-related disability and ordinary disability are to be treated separately. Construct a table that represents an aggregate probability, or rate, of disability. Then use post-decrement probability tables to “split up” this aggregate disability into the two types.

If you are coding a Core Projection, then a set of Projection Assumptions, as well as a Valuation Assumptions set, will refer to decrement tables.

Mortality tables have several parameters that do not pertain to other decrement tables:

Linking Mortality Base Rates

Check the Link mortality base rates box if the mortality table you are building is a modification based on previously existing underlying tables. When you check the box, the spreadsheet values and Options button will become inaccessible; click the Parameters button to specify the linkage parameters.

In the Mortality Table Base Rate Linkage Parameters dialog box, select the mortality table from which Pre-commencement base rates are drawn, from the list of mortality rate reference tables (all types except for service-based tables, which do not have an age dimension) unhidden in the current Project. Tables that were produced by linking with other base mortality rates may not be used as the source of base rates and thus do not appear in the list. If the selected table is of the "Age by Pre / post-commencement" type, only the pre-commencement rates will be extracted here (post-commencement rates are discussed separately below); alternatively, if the selected table is of the type "Age by Service", "Age by Year of Birth", or "Age by Duration from Decrement", parameters related to separate post-commencement mortality rates are inaccessible. If a sex-distinct table has been selected, specify whether you want to Transform to unisex, blending specified weights. Enter the percentage weight of male rates, and the complementary percentage weight of female rates will populate. For example, you could create a new unisex mortality table that blends 80% of male and 20% of female rates from an existing mortality table.

You may shift the base rates by a specified number of years, to reflect an Age setback, separately for Male and Female rates. Note that a negative age setback will be applied instead as a set-forward. For example, a setback of -4 will set the base rate at age 40 equal to the original rate for age 44. For no age set back, enter 0. The base rates can be further adjusted with multiplicative Adjustment factors, either Constant (separately for Male and Female rates), or a Database field that can vary by individual. (For no scaling adjustment, enter constant adjustment factors of 1.) If a database field is selected, Advanced parameters become available by clicking the newly accessible button. First, select if you would like to Transform database field values into adjustment factors. This can be useful, for example, if the database field contains raw data of some sort (e.g., benefit amounts) that should be converted into the multiplicative adjustment factors rather than applied directly. Enter the appropriate breakpoints in the grid that becomes accessible. Note that if the database field represents members' benefit amounts, these amounts are used directly as entered on the data and are not adjusted for future COLA increases. Second, select if you would like to specify values For missing database field values, use factors as specified for Male and Female. This could be useful, for example, in the Canadian paradigm where the database field values represent benefit amounts for inactives, but no benefit amounts are available for active participants and an aggregated or averaged value should be used instead. Third, select if you would like to Grade factors linearly between two specified ages. This will linearly grade factors from those specified to 1.000, beginning after the first age specified and reaching 1.000 at the second age specified.

Next in the linkage parameters, if it is accessible (i.e. the pre-commencement base rates are of the “Age” or “Age by Pre / post-commencement” type, or are set to “<no rates>”), check the option to coerce Post-commencement base rates to be the Same as pre-commencement if you would like to do so. Otherwise, the same parameters as provided for pre-commencement rates are available for post-commencement rates. Note that existing actives who transition to inactive status in future years will use these (potentially disparate) post-commencement parameters for mortality rates after commencement and will no longer use the pre-commencement parameters specified above (therefore, if using a field such as benefit to amount to transform the adjustment for post-commencement, actives transitioning to inactive status would also need to either have this benefit amount field, or you need to code an average adjustment factor to be used for the missing database field values).

When you click OK, to return to the Mortality Rate Table dialog box, the table you are building will populate with the newly-linked values. Note that you must uncheck the box if you wish to further modify the values or examine them in more detail.

Note that if you edit the source table, i.e., the table selected to provide the base rates, those changes will modify this linked table automatically; thus results from a Valuation or Core Projection referencing this linked table will be erased, as will the base rate parameter settings of the linked table (though the linked table’s mortality rates still will be visible when the linked table is viewed).

Mortality Projection

Check the Apply Improvement Scale box to apply rates of annual improvement in mortality experience to the mortality base rates, to create either a fully generational table or a static table reflecting mortality improvement to a particular year (typically in the future, although you may specify a year in the past). You may apply an improvement scale only to a table of the “Age” or “Age by Pre / post-commencement” type.

Select a Pre-Commencement improvement scale from the list of scales available in ProVal’s Mortality Improvement Scales library, or click the image/backdoor_button.gif button to access the library, in which you may create new improvement scales or modify existing ones. Enter the (pre-commencement) Base year (year from which you are projecting) in the text box. Similarly, select a Post-Commencement improvement scale, accessing the library by means of the image/backdoor_button.gif button if desired, and enter the (post-commencement) Base year.

For Projection, select either Fully generational, to project mortality improvement indefinitely into the future, or To year, to project from the base year only to the specified year. See the Technical Reference article entitled Mortality improvement (generational mortality) for details about the calculation of projected mortality rates.

If a fully generational improvement scale is applied, then an arrow appears to the right of the View button. Choose View table to display the mortality table and parameters as they were input. Clicking the View button itself will display the same as this first option. Choosing View table for an individual will yield another dialog box. Specify the individual's age and the valuation year in which it is attained and click View; ProVal will display the projected mortality for an individual who is that age in that valuation year.

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Dynamic Mortality

Dynamic mortality tables are unique in that they do not have the typical table interface for entering rates and cannot be edited by the user. This is because dynamic mortality tables are a collection of mortality rate tables – tables that, with the exception of the RP-2000+ Combined Mortality Table, were previously issued, or are expected to be issued, by the (U.S.) IRS for valuations and lump sum determinations under PPA. The rates are updated automatically to reflect the rates in effect for the valuation year.

For example, if you select the IRS 2018+ Static Mortality (dynamic) table under the Decrements topic of Valuation Assumptions and use those assumptions for a Valuation as of 1/1/2018, the mortality rates will be equal to the rates published as the “Static mortality tables with respect to valuation dates occurring during 2018” in IRS Regulation §1.430(h)(3)–1(e). When running a Valuation as of 1/1/2019 or later with these same assumptions (with no change in your selection of the mortality basis), ProVal will use the mortality rates expected (or already published) for 2019.

Similarly, in a Core Projection, the assumed mortality at each valuation date will be updated to reflect the expected table for the calendar year of the valuation date. Note, however, that dynamic mortality cannot be selected for experience decrements in Projection Assumptions.

For a dynamic mortality table library entry, the Mortality Rate Table dialog box contains a single parameter, for entering What year would you like to view?. Enter the desired calendar year in the parameter’s text box and click View. ProVal will display the static rate table associated with that year. Except for the RP-2000+ Combined Mortality Table (dynamic), this is the table published, or expected to be published, by the IRS for that calendar year.