Not applicable for Long Term Disability assumptions in OPEB mode. 

Post-decrement probabilities are conditional probabilities utilized in situations where an additional condition, besides eligibility and decrement caused by the contingency initiating the benefit, must be met at the time of decrement to receive a particular benefit. That is, receipt of the benefit is not certain, even after a participant becomes eligible and decrements from the appropriate cause. In some cases, this is because several alternative benefits are available. Typical applications for post-decrement probabilities include the following:

• Different benefits for in-service and ordinary (or occupational and non-occupational) disability. Both benefits are related to the disability decrement. The post-decrement probabilities associated with each are the fractions of all disabilities that are in-service and ordinary, respectively.

• Different payment form elections for pension benefits, such as lump sum and annuity alternatives. The post-decrement probabilities associated with the two retirement benefits might reflect, for example, 60% lump sum election and 40% annuity election.

• Participation assumptions for retiree medical or spouse life insurance plans. Usually, the participation rate is less than 100% when there are participant or spouse contributions towards the cost of the benefit.

The Post-Decrement Probabilities library dialog box presents a list of all Benefit Definitions that exist in the current Project (or were previously defined for a Valuation referencing either this Valuation Assumption set or a set from which it was copied by “saving as new”) and with which post-decrement probabilities are to be associated, i.e., those Benefit Definitions for which the box entitled “Post decrement probabilities apply” has been checked (in Input | Plan Benefit Definitions | Benefit Definitions). The probability, if any, that has already been associated with the benefit, whether a constant value, a table or “none” (discussed below), is displayed next to the name of the Benefit Definition. In the pension modes, if the Benefit Definition contains optional payment forms and the probabilities are entered as constants, the constant value of the normal form with an ellipsis (…) is displayed, indicating that additional values were entered. Click the name of a Benefit Definition in this list to access the Post-Decrement Probabilities dialog box for the specific Benefit Definition and complete its parameters to define the associated post-decrement probabilities. The presentation of these parameters differs between OPEB mode and the pension modes; therefore, the parameters are discussed in separate sections of this article (below).

In the pension modes (except U.K.), the For joint life optional payment forms parameter pertains to joint life annuity Types of payment forms specified by the Optional forms parameter of a Benefit Definition.  You may assume either that the marital assumption fractions are applied to value benefits paid on a joint and survivor payment form or that those fractions are 1 (that is, 100% of the population is assumed married and, in modes other than Canadian registered pension and German pension, 100% is assumed to elect the joint and survivor form), by selecting either the Joint life if married; corresponding life annuity if single option or the Joint life for all participants option, respectively. (Note: if the normal payment form is a joint life annuity, the marital assumption fractions always are applied to determine its present value.) Thus under the Joint life if married; corresponding life annuity if single option, the post decrement probabilities also take into consideration the fraction of the population that is married and, except in Canadian and German modes, electing the joint and survivor form. For example, consider a U.S. qualified plan in which a life annuity normal payment form is assigned a post decrement probability of 60% and an optional joint life payment form is assigned a post decrement probability of 40%. If Joint life for all participants is selected, the 60% will be applied to the life annuity payment form and 40% to the joint life payment form. If Joint life if married; corresponding life annuity if single is selected and 80% are assumed married (and 100% of married participants are assumed to elect the joint and survivor form), then 32% (40% x 80) will be assumed to receive the joint life payment form and 68% will be assumed to receive the life annuity.

If you wish, you may select a Plan Filter (in German mode, a Promise Filter), from the dropdown list, to reduce the list of possible choices to those Benefit Definitions associated with a particular Plan Definition (or in German mode a particular Benefit Promise). Please see Filters for details.

 

Pension modes

Post-decrement probabilities must be defined for each Payment Form Definition referenced by the Benefit Definition, that is, the Normal form and each Optional form associated with the Benefit Definition. The normal payment form is always listed, in the first row of the grid at the top of the dialog box, and labeled as such; if the Benefit Definition includes optional payment forms, they will also be listed (below the normal form) and labeled as such. You may select different entries (whether a constant value or a table selection, discussed below) for the normal payment form and each optional payment form.

There are three options for specifying the values of the associated post-decrement Probabilities:

1. Select the Constant option to apply the same conditional probability of benefit receipt for all active records meeting the eligibility requirements and decrementing from the appropriate cause (that is, there is no variation by age, service and sex). For each Payment Form listed above, enter a constant value in the Probabilities column. Enter each probability as a number between zero and 1 (not as a percentage). Instead of a single constant value for a payment form, you can specify that post-decrement probabilities Also vary by the contents of a coded database field or by calendar year of decrement (the relevant parameters are discussed below).

2. Select the Table option to specify probabilities defined by tables that vary by age, service and / or sex. For each Payment Form listed above, select from the list of Post-decrement Probability Reference Tables that have been saved and unhidden in the current Project or click the button (to the right of the Probabilities column) to create a new table. Instead of a single table for a payment form, you can specify that post-decrement probabilities Also vary by the contents of a coded database field or by calendar year of decrement (the relevant parameters are discussed below).

3. Select None (i.e., probability of receipt of normal payment form is 1) to assign a post-decrement probability, or conditional probability, of 1 to the normal payment form (and a probability of receipt of 0 to each optional payment form), that is, the benefit is payable under the normal payment form and there is no additional condition to meet, or everyone who is eligible receives the benefit upon decrement from active status. If you select this option, the Payment Form and Probabilities columns above become inaccessible (as no further specification is needed). This option is useful when a benefit has been defined to accommodate post-decrement probabilities, but no post-decrement probabilities are to be reflected in this particular assumption set.

To indicate that the post-decrement probabilities Also vary by the contents of a coded field on the database, that is, different constant values or tables should be used for different groups of records, identified by values of a coded database field (e.g., Division), check the Coded database field box and then select the field from the list of all coded fields unhidden in the current Project. A Code column now appears in the grid above: for each code value, there is a row in the grid for the normal payment form and for each optional payment form. For each combination of code and payment form, enter the numeric value (if the Constant option is selected above for Probabilities) or select the desired post-decrement probability table library entry (if the Table option is selected above for Probabilities).

To indicate that the post-decrement probabilities Also vary by calendar year of decrement (i.e., the calendar year of the anniversary of the valuation date in the year of decrement), check the Calendar years box and enter (in the text box below) for all constant or tabular post-decrement probabilities that you will specify, the first calendar year to be associated with a particular constant value or table. For example, if the post-decrement probabilities will be 0.25 through 2008, 0.2 for 2009, 0.15 for 2010, 0.1 for 2011, 0.05 from 2012 through 2014 inclusive and 0.25 in 2015 and later years, then enter “2009 - 2012, 2015” in the text box. Two columns, From and To, now appear in the grid above, and rows appear according to the “breakdown by year” indicated by the text box entries. In our example, rows appear for years through 2008, for 2009, for 2010, for 2011, for years 2012 through 2014 and for years 2015 and later, so that you may enter the constant value associated with each set of years. There are rows in the grid for the normal payment form and for each optional payment form. For each combination of years and payment form, enter the numeric value (if the Constant option is selected above for Probabilities) or select the desired post-decrement probability table library entry (if the Table option is selected above for Probabilities).

To indicate that the post-decrement probabilities Also vary by both a coded field on the database and the calendar year of decrement, combine the instructions in the two paragraphs above; the grid above will populate with both the Database Code column and the From/To columns. Specify the desired constant or table probability for each combination of code value and decrement year.

The Table service based on parameter is used to define service for look up if the table has a service dimension. The preset option, “<rounded attained age – rounded hire age>” indicates that service will be computed as the difference between rounded attained age (as of the decrement date) and rounded hire age. (See also the discussion of the date of hire (or hire age) parameter under the Active Data topic of the Census Specifications command.) Alternatively, Table service may be based on a database Field; select from the list of database fields in the current Project. You may refer to a date field from which to measure service or to a numeric field containing service as of the valuation date. Note that selecting, by name, the date of hire field of the Active Data topic of the Census Specifications might not produce the same result as the preset option. This is a consequence of the fact that if a database field is selected, truncated service based on the field is used. That is, if you select the date of hire field by name, ProVal subtracts the hire date from the decrement date and then truncates. The result may be lookup service of one year more or less than lookup service computed as the difference between rounded ages at the valuation date and at hire. For more information about table lookups, see the discussion of table interface. To use fractional service attribution (e.g., hours-related service) or rounding (e.g., completed years), select from the library of Service Definitions. The button accesses the library to create and modify Service Definitions. (See also the discussion of Service Definitions and attribution in the Technical Reference article entitled "PUC and UC attribution".)

Note that for any benefits commencing at post-termination retirement age, the applicable post-decrement probabilities will be based upon age at retirement, not termination.  In this case, all references to "decrement" in this section refer to the retirement decrement.  

OPEB mode

There are three options for defining the associated post-decrement probabilities:

1. Select the Constant option to apply the same conditional probability of benefit receipt for all active records meeting the eligibility requirements and decrementing from the appropriate cause. Enter each probability as a number between zero and 1 (not as a percentage).

2. Select Variable to specify probabilities defined by tables that vary by age, service and / or sex. Select from the list of Post-decrement Probability Reference Tables that have been saved and unhidden in the current Project or click the button to create a new table. Instead of a single table, you can specify “<rates by coded field/calendar year>” if the table to be used varies for different groups of records, identified by values of a coded database field (e.g., Division), and/or according to the calendar year of decrement (that is, the calendar year of the anniversary of the valuation date in the year of decrement). Click the Parameters button to select the tables (see the discussion of Additional Post-Decrement Probabilities Parameters at the end of this article).

3. Select None (i.e., probability of receipt is 1) to assign a post-decrement probability, or conditional probability, of 1, that is, there is no additional condition to meet, or everyone who is eligible receives the benefit upon decrement from active status. This option is useful when a benefit has been defined to accommodate post-decrement probabilities, but no post-decrement probabilities are to be reflected in this particular assumption set. Click “OK” to return to the Post-Decrement Probabilities library dialog box, where “None” now appears next to the name of the Benefit Definition.

Because a Benefit Definition in OPEB mode can represent both benefits payable to the member and benefits payable to the spouse, further discussion about using post-decrement probabilities to code participation assumptions is in order. For member benefits, input the probability that the member will elect coverage given that he/she decrements and is eligible for coverage at the time of decrement. For spouse benefits, input the probability that the spouse will have the right to coverage at the time the member decrements and that coverage will be so elected for the spouse. For example, consider a retiree medical plan that makes medical coverage available to the spouse only if the retiree elects coverage for himself (or herself). If the probability that the member elects coverage is 80% and, of the married members so electing, 60% of their spouses also elect coverage, then 0.8 should be entered as the post-decrement probability for the member Benefit Definition and 0.48 (0.8 multiplied by 0.6) should be entered as the post-decrement probability for the spouse Benefit Definition. Note that the probability that the member is married is not a factor in calculation of the post-decrement probability value; typically, the percentage of members that are married is entered for the Fraction of population that is married parameter under the Other Valuation Parameters topic.

When a dual Benefit Definition (containing both a Member Payment Form and a Spouse Payment Form) is used, it is presumed that coverage has been elected for the spouse whenever coverage has been elected for the member. Therefore, if not all spouses of members with medical coverage will also have medical coverage, as in our example in the preceding paragraph (where only 60%, not 100%, of the spouses with a right to elect coverage actually did so), separate Benefit Definitions for member and spouse benefits must be defined.

Additional Post-Decrement Probabilities Parameters (OPEB mode)

The Parameters button (OPEB mode) provides access to additional parameters that are sometimes needed to specify conditional (post-decrement) probabilities. When there are two or more applicable rate tables for a post-decrement probability, these parameters specify how the rates vary, either by the calendar year associated with the year of decrement or according to the contents of a coded database field. Click this button to set parameter values for either of these options. For more information, see Additional Post-Decrement Probabilities Parameters. See also Post Decrement Probability Tables for more information about the attributes of a reference rate table.

 

Click the Clear button to remove the post-decrement probabilities for this Benefit Definition from the Valuation Assumption set you are editing. This item will no longer appear when you View this set of Valuation Assumptions (although you might still have associated post-decrement probabilities with this Benefit Definition in another set of Valuation Assumptions).