ProAdmin Tip: Interpolating Early Retirement Factors per Prior Administrative Practice

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You can use Administration Factors to help make early retirement factor benefit component tables based on age by month reduction factor tables when they are based on a static interest rate and standard mortality table. You may find that such a table is needed for consistency in administrative practice regarding the interpolation of early retirement factors.

To set up age by month reduction factor tables:

  1. Select Conversion Factors as the calculation to perform within Administration Factors.
  2. Set the Primary Annuitant age range for which early factors are needed. Be sure to select “Include monthly ages.”
  3. Set the interest, mortality, and timing parameters as needed for the applicable actuarial equivalence.
  4. Create two (typically life annuity) payment forms:
    • Define the first payment form such that the benefit commences immediately. If not a life annuity, define the other parameters as needed for the payment form type.
    • Define the second payment form to commence at the future age, from which all early factors are reduced, typically age 65 or normal retirement age. All parameters should be the same between the two payment forms except for benefit commencement.
    • Set the second (deferred) payment to be the Normal Form of Payment.
  5. Click “Run” to generate the table of factors. Copy or save the output to Excel.
  6. In Excel, reformat the table produced for the immediate benefit payment form to a two-dimensional integer age by month table, so it matches the table formatting in ProAdmin for an age by month table.
  7. Add a new age by month benefit component table in ProAdmin. Set the youngest and oldest ages as needed under Options > Row & Column Limits. Copy the reformatted table from Excel, paste into your ProAdmin table, and save.
  8. The early retirement reduction table is now ready to be used in a Benefit Formula, or Accrual Basis, Component table. Within the table component, use the Age / Interpolation button to set the age definition and factor rounding applicable to the early retirement factor per the plan administrative practice. Because the starting early retirement factor table is monthly, selecting an age definition in years and months will return a factor directly from the table, regardless of age rounding.

Additional Resources
More information on this can be found in ProAdmin Help using the following links:
Administration Tools
Benefit Component Tables