Salary growth is divided into two components: a salary inflation rate and a salary merit scale. The former item is entered as a constant, possibly varying according to the calendar year associated with the salary; the latter is entered in a rate table. A single merit rate table may be used for all active participants. Alternatively, different tables may be used for different calendar years, or different tables may be selected for different values of a coded field in the database. See Varying Salary Merit Scale, under the Salary Increases topic of Valuation Assumptions, for details about tables that vary by calendar year or according to the contents of a coded field.

A salary scale has a table interface that permits salary increase rates to vary by age, service, age and service (i.e., the table is select and ultimate), and sex.

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 salary scale table is recommended, but not required. You may use a salary inflation parameter that reflects total salary growth. If you do this, however, you will lose the following capabilities:

• As previously mentioned, using a salary scale table allows access to values that depend upon age, service or sex.

• In a projection, the salary merit scale entered in a salary scale table is kept constant, but salary inflation may vary based on general inflation. Having part, but not all, of salary growth respond to the inflationary environment is theoretically preferable.

• In a projection, a new entrant hired after the initial (baseline) valuation date will have salary at hire increased with salary inflation from the initial valuation date to hire date. The salary merit scale table, however, is not applicable before the hire date. Again, using some, but not all, of the total salary growth is the theoretically preferable approach.

See also the discussion of the Salary merit scale parameter under the Salary Increases topic of Valuation Assumptions.

If you are coding a core projection, Projection Assumptions, as well as Valuation Assumptions, may refer to a salary merit scale.