QUESTION: My client has two plans. The old one is a final average earnings plan while the new one is a cash balance plan. Participants are allowed a one-time change to the new plan effective at the next first of month or they may choose to stay in the old plan. New participants must be enrolled in the new plan. The data contains the specific plan change date for each participant. Benefits for the old plan are computed as though the participants terminated on the change date. How can I compute the final average earnings for each participant at his or her own change date?

ANSWER: The solution is to setup a FAS operator that uses a Salary Definition Set which only provides the amounts from hire to the plan change date and removes array entries after it.

Step 1: We will need a salary transformation expression in the Salary Definition of the Salary Definition Set. If the variable PC_Date contains the individual participant’s plan change date, then for any measurement period, the Salary Definition’s transformation is setup:

	A:= #MPNET #THIS	&	; A will contain the individual net
			; salary amounts based on the
			; Salary Definition's measurement
			; period.
	B:= A * (#date <= PC_Date)	&	; B has the same values as A from
			; date of hire to (and including)
			; the change date.
	#MPSUM B		; At every end of measurement period,
			; C contains that measurement's
			; period total amount.

 

This zeros out the salaries after the change date. We need to remove the zero entries from the array.

Step 2: To do this we need a Service Definition Set that measures service up to the change date to use in the custom final average operator.

Define PC_Date as a Date Adjustment: Adjust date: PC_Date.

Setup an Eligibility Definition, called “Eligibility at plan change date” where the conditions are age 15 and the Date Adjustment is set to PC_Date. We can assume that everyone is at least 15 years old and the requirements will then be on th PC_Date.

In the Service Definition, of the Service Definition Set, under Service Eligibility (e.g., 21 and 1), put a check in the bottom box: Service stops accruing after this eligibility condition (rare), and select “Eligibility at plan change date.”

 

Setup a custom operator, where the type is: “Final Average Salary (e.g. n #FAS m).

Under Salaries & Basis, set “For the Included Salary Definition Set(s):” select the set which uses the Transformation Expression.