Basic Form Parameters - ProAdmin 320

The Basic Form Parameters topic allows you to set general information about the payment forms. This topic appears for all payment form types except the Lump Sum type.

The Deferral Period parameters are used to define the period of time before benefits commence. All forms of payment are permitted to have a deferral period except the Social Security level income types of annuities.

None specifies that the benefits are payable immediately.
To participant age allows you to specify an integer deferral age value or Plan Constant in the box. This choice is ghosted (i.e., not available) for Certain & Pop-Up annuities. If this payment form is converted from the normal form using the beneficiary's age, sex and mortality (see the Conversion from Normal Form dialog box), this parameter is labeled "To beneficiary age" and represents the integer beneficiary age to which the payment form is deferred.

For period allows you to enter the number of years and months of the deferral period.
To date field allows you to select a database field from the multi-choice field of date type fields in the Data Dictionary that are unhidden in the current Project. This choice is ghosted (i.e., not available) for Certain & Pop-Up annuities. One use of this feature is to calculate the payment form value for a custom J&S percentage that is in compliance with Internal Revenue Code regulation 1.401(a)(9) for a non-spouse beneficiary.

If the date in the referenced field is outside of the initial range of calculation dates, ProAdmin will extend the range of calculations dates when possible. If the referenced date field is a Calculated Date, however, it is not possible to extend the range of the calculation dates and the calculation will abort if the deferral date is after the last calculation date. If this situation should occur, including a payment form for which all members are ineligible, but with a deferral date far in the future (using a Data Default) will allow the calculation to proceed.

The Temporary period parameters are used to define the period of time during which the benefits are payable. Most forms of payment are permitted to have a temporary period, but the following types are not: Certain & Pop-Up, Social Security level income (all versions) and Custom Contingent Joint Life.

None specifies that the benefit is not temporary.
To participant age allows you to enter an integer value or Plan Constant to which the benefit is temporary. If this payment form is converted from the normal form using the beneficiary's age, sex and mortality (see the Conversion from Normal Form dialog box), this parameter is labeled "To beneficiary age" and represents the beneficiary age to which the payment form is temporary.
For period allows you to enter the number of years and months of the temporary period.
To date field, allows you to select a database field from multi-choice field of date type fields in the Data Dictionary that are unhidden in the current Project.

Certain period is available if the type of payment form is one of the certain annuity forms (Certain Only Annuity, Certain & Life Annuity, Certain & Joint Life Annuity or Certain & Pop-Up Annuity) or the Social Security Level Income form. It specifies the number of years and months for which the annuity is paid whether or not the member or beneficiary is alive. For the Social Security Level Income form, where the certain period may end after the PIA commencement age for some commencement dates, the participant must have a deferred benefit greater than zero in order to be eligible for this payment form for those commencement dates.

The Beneficiary benefit ignores certain period checkbox is available only for the Certain & Joint Life Annuity type. If checked, it indicates that the value of the certain period will be borne by the member benefit amount, so the beneficiary amount is computed to be the same as an otherwise identical Joint Life Annuity.

The Joint life refund annuity checkbox is available only for the Refund Annuity type. If checked, the annuity will be paid as a joint life refund annuity until both the member and spouse have passed. At that time any remaining balance of the guaranteed amount will be paid in a lump sum. The annuity payments under this form are always a joint & contingent survivor annuity where 100% of the benefit is paid when the member is alive and the specified Fraction of Joint & Survivor benefit received when Only the beneficiary is alive is paid after the member has passed while the beneficiary is still alive.

The three Fraction of Joint & Survivor benefit received when: parameters (Both member and beneficiary are alive, Only the member is alive, and Only the beneficiary is alive) are available for joint life forms of annuities (Joint Life Annuity, Certain & Joint Life Annuity, and Joint Life & Social Security Level Income). The Fraction of Joint & Survivor benefit received when Only the beneficiary is alive parameter is also available for joint life refund annuities (where the other two joint & survivor parameters are always assumed to be 1). These parameters indicate the fractions, entered as values or Plan Constants, of the annuity payment amount, as determined by the Benefit Formula, that are paid under the respective survivorship statuses. For example:

If 1, 1 and 0.5 are entered, respectively, the payment form is a 50% joint & contingent survivor annuity, i.e., 100% paid when the member is alive and 50% paid when only the beneficiary is alive.
If 1, 0.5 and 0.5 are entered, respectively, the payment form is a true 50% joint & survivor annuity, reducing to 50% on the death of either the member or the beneficiary

If 1, 0 and 0 are entered, respectively, annuity payments are made only during the joint lifetime, ceasing on the first death.

If 0, 0 and 1 are entered, respectively, the payment form is a reversionary form with payments made only to the beneficiary after the death of the member.

If Beneficiary fraction in field is checked, a database field is specified to determine the fraction paid when only the beneficiary is alive. This option is useful, for example, for non-spouse beneficiaries for whom the J&S fraction must be constrained to meet the IRC minimum distribution rules; the fraction can be calculated in the data defaults.

The Social Security leveling approach option is available only for the Joint Life & Social Security Level Income form of annuity. If Level the member's (reduced) benefit is selected, the beneficiary's benefit after the death of the member is unchanged regardless of when the member dies. In this case, the normal form benefit is reduced for the joint & survivor option first, and this sets the beneficiary benefit. The J&S reduced benefit to the member is then further adjusted for the level income option. If Level the member's and the beneficiary's benefit is selected, the beneficiary's benefit is always the specified J&S percentage (the Only the beneficiary is alive parameter above) of the member's benefit, so it reduces at the social security assumed commencement age.

The Cash Refund section specifies parameters for the Refund Annuity type. Guaranteed amount allows you to select a Benefit Formula Component, from those unhidden in the current Project, that calculates the amount that is guaranteed to be paid on the member's behalf. The button accesses the library to create and modify Benefit Formula Components. The guaranteed amount is reduced by payments made to the participant until it reaches zero. If the sum of the payments made to the member are less than the guaranteed amount at the member's death, choose the Remaining balance payable to beneficiary as option as either a single Lump Sum payment (also known as Modified Cash Refund) or as Installment with guaranteed period rounded up to: periodic payments in the same amount and frequency as the member's payments until the guaranteed amount is reduced to zero. When the remaining balance is paid to the beneficiary as continued installments, the original guaranteed amount is divided by the annual benefit at commencement to calculate the guaranteed period (certain period), which is rounded up to the next Month or next integral Year. If Joint life refund annuity is checked above, then payments continue for the joint lives of the member and spouse. If the sum of the total payments made is less than the guaranteed amount at the death of both member and spouse, the remaining balance is paid as a lump sum to a beneficiary. For details about the calculations for this form of payment, see the Technical Reference article Refund annuity payment forms. For an example of this form of payment see FAQ - Computing refund annuities.

The Cost-of-Living Increases (COLAs) section defines the cost-of-living increase rate assumption during the payment period and the deferral period. The COLA rate during payment period is used to index benefits after payment has commenced. Select the Constant option to specify a single COLA rate to apply to all years after payments start. If there is no payment period COLA, then enter zero as the COLA rate. Enter the COLA rate as a number (e.g., 0.03), not as a percentage. COLA rates must be in the range between 0 and 1. Select the Field option to specify that the constant COLA rate is defined by a database field, and select the scalar numeric field from the drop-down menu. Select the Variable option to access COLA rate tables from the library. COLA rate tables for payment periods may vary by age, sex and duration (time elapsed) since the commencement of payments. Note that the age reference for COLA rate tables is the member age whether or not the payment form is calculated based on the beneficiary age and sex.

The COLA rate during deferral period is used to index benefits from the decrement date up to the payment commencement date. This section is available for payment forms defined with a Deferral period of other than "None." Select the Constant option to specify a single COLA rate to apply all years before payments start. If there is no payment period COLA, then enter zero as the COLA rate. Enter the COLA rate as a number (e.g., 0.03), not as a percentage. COLA rates must be in the range between 0 and 1. Select the Field option to specify that the constant COLA rate during deferral is defined by a database field, and select the scalar numeric field from the drop-down menu. Select the Variable option to access COLA Rate Tables from the library. COLA rate tables for deferral periods may vary by age and sex. Note that the age reference for COLA rate tables is the member age whether or not the payment form is calculated based on the beneficiary age and sex.

Rate type indicates whether Compound interest (geometric) or Simple interest (arithmetic) COLAs apply. That is, if next year's annual pension amount is determined by applying the COLA rate to this year's pension amount (the typical application of COLAs), then the COLA is compound, whereas a simple COLA applies the COLA rate for all years (for both the deferral period and the payment period) to the initial annual pension amount determined at the date of decrement from active status.