Clicking the Parameters button for a Federal applicable provincial law selection under the Minimum Funding Amortization Bases topic leads you to additional parameters that specify whether to apply the updated regulations that were effective July 1, 2010 and, if so, how to reflect them. If you apply the updated regulations, the average solvency ratio must be calculated, in order to determine the solvency deficiency. If you do not apply the updated regulations, Federal law in effect prior to the updated regulations will be used.

Check the Apply final regulations effective July 1, 2010 box to indicate that these regulations are applicable. If this box is not checked, then the rest of the parameters are inaccessible. If the box is checked, the remaining parameters must be completed.

In the Historical Valuation Results section, if you check the Use current year solvency ratio box for the Prior Year, ProVal will calculate the current year solvency ratio, as of the current valuation date, and use this ratio for the prior year when determining the average solvency ratio. In a forecast, ProVal will keep track of the information necessary to calculate the historical ratios in each forecast year. If this box is not checked, you must enter the Prior Year column values for the Solvency liability, Solvency assets and Value of amendments as of the valuation date for the (prior year) valuation preceding the current year valuation. Note that if you check this box, you must also check the Use current year solvency ratio box for the 2nd prior year; otherwise, the Valuation Set or forecast run will abort.

If the Use current year solvency ratio box is checked for the 2nd prior year, ProVal will use the current year solvency ratio, as of the current valuation date, for the 2nd prior year when determining the average solvency ratio. In a forecast, ProVal will keep track of the information necessary to calculate the historical ratios in each forecast year. If this box is not checked, you must enter the 2nd Prior Year column values for the Solvency liability and Solvency assets as of the valuation date for the valuation preceding the prior year valuation.

The Solvency liability under the Prior year and 2nd Prior Year columns is the liability value from those prior valuations (for the year prior to the current year and the year preceding that prior year, respectively) that will be used to determine the historical solvency ratios.

The Solvency assets under the Prior year and 2nd Prior Year columns is the asset value from those prior valuations (for the year prior to the current year and the year preceding that prior year, respectively) that will be used to determine the historical solvency ratios. Note that this amount should reflect the value of any letters of credit.

The Letters of credit under the Prior year and 2nd Prior Year columns are the total face value of the letters of credit included in the solvency assets.

Enter the Value of amendments included in the prior year solvency liability for amendments whose effect was measured for the first time between one and two years prior to the current valuation date. This amount should be as of the prior valuation date and will be subtracted from the prior year solvency liability when calculating the prior year solvency ratio.

If you check the Adjust assets for special payments box, the solvency assets for the prior year and 2nd prior year valuations will be adjusted by the present value of special payments made after the prior valuation date and 2nd prior valuation date, respectively. This parameter will not affect the calculations for years for which the current year solvency ratio is used for a prior year, but ProVal will store the necessary information in a forecast and adjust the solvency assets in the forecast years. If you are not using the current year solvency ratio for prior years and have checked this box, you must enter the amount of Special payments, and the corresponding solvency Interest rate, as of the prior valuation date and 2nd prior valuation date, respectively, in the Prior Year and 2nd Prior Year columns. ProVal will determine the present value of the special payments as of each valuation date, using the provided interest rate, and then increase the asset value as of that valuation date accordingly.

If you did not check the Use current year solvency ratio box for the Prior Year, the Current year value of amendments parameters are accessible. Enter the value on a solvency basis, as of the current valuation date, of amendments Made 1-2 years prior (that is, measured between one and two years prior) to the current valuation date) and amendments Made 0-1 years prior (that is, measured between zero years and one year prior) to the current valuation date. These values are used to determine the solvency liability as of the valuation date without regard to any amendments during the prior two years. During a forecast, these values will be estimated based upon the ratio of the value of the amendment to the total solvency liability value. During a forecast, or for a Valuation Set plan change event, the current value of amendments Made 0-1 years prior is defined based on the coded plan change and, in the case of a Valuation Set, will be added to the input value of this parameter. ProVal will calculate this value automatically if you have a Plan Change Event in a Valuation Set; this value must be entered, however, for a forecast.

Check the Solvency relief was previously elected box if solvency relief was previously elected, a solvency relief base was created, and the present value of special payments through the end of the relief period for existing bases should be reflected in the calculation of the solvency deficiency as of the current valuation date. When this box is checked, the Remaining solvency relief period must be specified: enter the number of years remaining in the solvency relief period. This value will be used to determine the maximum number of years that may be reflected when determining the present value of going concern special payments used to offset the solvency deficiency and to determine the present value of going concern special payments used to fund the initial solvency deficiency. To reflect these special payments, the bases they correspond to must be defined with a check in the box for the Include payments beyond 5 years in solvency assets parameter (found in the Minimum Funding Amortization Basis dialog box, entered by double-clicking the name of the base in the list under the Minimum Funding Amortization Bases topic). If the amortization period of one of the bases is shorter than the number of years entered here, the amortization period entered on the amortization schedule will govern. The number entered generally should be 10 or fewer. If the number of years remaining in the solvency relief period is 5 or fewer, the solvency assets will no longer be adjusted for the present value of the going concern payments and the solvency deficiency will not be offset by the present value of any special payments.