When the late retirement calculation is performed annually using factors from the beginning of the plan year, the calculations use an immediate annuity at the beginning of the plan year and a one year deferred annuity (or an annuity deferred to the calculation date, whichever is shorter).  The determination of these factors and the subsequent increase rate is detailed below. 

The notation for an immediate annuity is where the periodicity (monthly, quarterly, etc.) is understood.  Ages such as B.b, M.m and N.n., are represented by a capital letter for the integer portion and its lower case letter representing the fraction al part of the age.

1.    Immediate life annuity for member's age at beginning of plan year (BOPY)

The first relevant date is NRD. After determining the member's age (M.m) at NRD or ages after NRD at each BOPY, compute the immediate annuity:

Development of immediate factor for member age M.m at BOPY or NRD
at age	using basis at NRD or BOPY to compute Immediate factors	desired factor	interpolation
M			[ (1-m) ] + [ m ]
M + 1

2.    A deferred annuity factor from the member's age at BOPY or NRD to any other date within the same plan year  

If the member's age at BOPY is M.m and the member's age at calculation date is B.b, the deferred annuity for one year can be computed using two deferred for one year annuities at ages M and M + 1.  

Development of deferred factor for one year from age M.m at BOPY
from age	deferral period	using basis at age M.m compute factors	desired factor	interpolation
M	1	1|	1|	[ (1-m)1|] + [ m1| ]
M + 1	1	1|

 

The immediate annuity for member's age at BOPY and the one year deferred annuity can now be used to compute the final increase factor.

Development of deferred factor from age M.m to age B.b (deferral period =B.b-M.m)
from age	to age	deferral period	Annuiies from values above	desired factor	interpolation
M.m	B	m-b		B.b-M.m|	[ (m - b)] + [1- m + b |]
M.m	B+1	(1-m) + b	1|

Having calculated the increase factor, ProAdmin now computes a possible payment amount and makes a comparison to the Accrued Benefit to determine the amount payable at BCD (or any date).  The increase factor, called the Incremental Late Retirement Factor (from boy), is computed at each date using the basis in effect at each calculation date for periods beginning at NRD or BOPY to any date within the same plan year.  The increase factor is the ratio of the immediate factor at the beginning of the plan year to  the deferred factor, from the beginning of the plan year to the calculation date. ProAdmin multiplies the value of the benefit at the previous end of plan year by the Incremental Late Retirement Factor.

1. If the date is between NRD and the end of the plan year in which NRD exists, this amount is the accrued benefit at NRD multiplied by the Incremental Late Retirement Factor
2. If the date is after the end of the plan year in which NRD exists, this amount is the amount from the last day of the plan year immediately preceding the date multiplied by the Incremental Late Retirement Factor.
3. ProAdmin makes a comparison of two amounts at each date and selects the larger to be the benefit payable at that date or BCD. The two amounts are:
   1. The Accrued Benefit computed at the date, using plan provisions (i.e., without actuarial increases)
   2. The amount computed in 1 or 2 above

Please click here to see examples of this calculation.