Under the Payment Forms topic, you define the annuity, lump sum and life insurance payment forms whose present values you wish to calculate and you indicate, for conversion factors, which payment form to convert from.  There are also parameters to blend male and female factor values and/or to blend life with joint life factor values.

Select a payment form to modify contains entries for each payment form you have already defined, if any.  To add a new payment form, click the Add button and complete the parameters in the Payment Form Definition dialog box.  To change the order of the payment forms in the list, click the Reorder button.

Within the Payment Form Definition dialog box,

Name is a description of the type of payment form, including spaces.

Type is a multi-choice field where you select the applicable payment form family.  The other available parameters on the dialog box change based on this choice. The available types are "Life Annuity", "Joint Life Annuity", "Certain Only Annuity", "Certain & Life Annuity", "Certain & Joint Life Annuity", "Life Insurance", and "Lump Sum".

• If Life Annuity is selected, then the benefit is a series of payments to a single life and its value depends upon single life mortality during both the payment period and a deferral period, if any.  Unless temporary receipt is indicated, payments continue for the entire lifetime.

• If Joint Life Annuity is selected, then the benefit is a series of payments to either or both of two lives.  Its value depends upon joint life, as well as single life, mortality, as applicable.  That is, the payments are discounted using single (member or beneficiary/spouse) or joint life (member and beneficiary/spouse) mortality, whichever is indicated by the survivorship status at each date both before and after payments start.  Unless temporary receipt is indicated, payments continue for the entirety of the applicable lifetime(s).  The three Fraction of Joint & Survivor benefit received when parameters (discussed below) determine whether the payments are made only during the joint lifetime of the member and the beneficiary (a true joint life annuity), as long as either survives (a joint and last survivor annuity), or only after one life had died (a reversionary life annuity).  The fraction parameters also indicate the relationship of payment amounts under the different survivorship situations.

• If Certain Only Annuity is selected, then the benefit is a series of payments certain to be made for a stated time period and its value at the time payments commence does not depend on life contingencies.  Mortality is applied, however, during a deferral period, if any.

• If Certain & Life Annuity is selected, then the benefit is a series of payments certain to be made (once the deferral period, if any, is survived) for a stated time period and thereafter to a single life, if then living. Its value depends upon single life mortality, as well as interest, for payments made after expiry of the certain period.  That is, the life contingent payments are discounted using mortality for the entire period starting with the current age.  Payments made during the certain period, however, are discounted using interest only during the certain period but interest and mortality during a deferral period, if any.

• If Certain & Joint Life Annuity is selected, then the benefit is a series of payments certain to be made (once the deferral period, if any, is survived) for a stated time period and thereafter to either or both of two lives, if then living.  During the life contingent period and the certain period, the life contingent payments are discounted using joint or single life mortality, whichever is indicated by the survivorship status at each date after payments start; during a deferral period, if any, the life contingent payments are discounted using joint or single life (member or beneficiary/spouse) mortality, whichever is indicated by the survivorship status at each relevant date before payments start (see the discussion below of the Beneficiary Determined at parameter).  Payments made during the certain period, however, are discounted using interest only during the certain period but interest and single life (member) mortality during the deferral period, if any.  The three Fraction of Joint & Survivor benefit received when parameters determine whether what level of payments are made only during the respective lifetimes of the member and the beneficiary after the certain period has passed.  Payments cease at the later of the member’s death, the end of guaranteed period, or the beneficiary’s death.

• If Life insurance is selected, unless it decreases annually (see below), the benefit is payment of $1 (adjusted for any COLA or decrease ratio) in a lump sum upon death.  Its value depends upon single or joint life mortality, whichever is indicated, during both the insurance coverage period and a deferral period, if any. Unless temporary coverage is indicated, the insurance continues for the entire lifetime. Checking Only paid if {Member/Beneficiary} dies {last/first} designates this as a joint life insurance payable upon the selected last survivor or first to die option.

The Decreases annually checkbox indicates that the specified Initial face amount of the life insurance reduces annually by the specified Annual decrease value until it reaches the Minimum face amount. When calculating decreasing life insurance, COLAs cannot be applied, and there is a Factor applies to choice to clarify the type of insurance to be valued.

If Factor applies to the Initial face amount, a standard decreasing life insurance is valued, which pays the Initial face amount for death at any time during the first year of the payment period and then decreases annually after the first year until it reaches the Minimum face amount.  Accordingly, the payment ratio is calculated by determining the dollar amount of insurance in force each year and then dividing the inforce by the Initial face amount, and the present value of the insurance is determined by multiplying the insurance factor by the Initial face amount.

If Factor applies to the Annual decrease, the life insurance portion of a modified refund annuity is valued where the Annual decrease is assumed to be the annual annuity payment and the Initial face amount is the initial guaranteed payment.  For this factor, the benefit begins at the Initial face amount, decreasing annually during the payment period from an initial payment equal to the ratio of the Initial face amount to the average first year inforce amount, where the inforce is calculated based on the payment frequency and the annual decrease amount. If death occurs during the deferral period, the full Initial face amount is payable. Thus, when the Factor applies to the Annual decrease, the insurance factors assume that the Initial face amount applies during any deferral period and then decreases during the first year of payment, whereas when the Factor applies to the Initial face amount, the insurance factors assume no insurance during the deferral period and no decrease until the second year of payment.  When the Factor applies to the Annual decrease, the payment ratio is calculated by determining the dollar amount of insurance inforce each year based on the annual decrease, payment frequency and timing, and then dividing the inforce by the Annual decrease value. The present value of the insurance is determined by multiplying the insurance factor by the Annual Decrease. Factors that apply to the annual decrease can be used to match the special life insurance annuity factors displayed in ProAdmin refund annuity detailed results for refund annuities where any remaining balance is paid to the beneficiary as a lump sum.  (Refund annuities where any remaining balance is paid to the beneficiary as installments are calculated using certain and life factors). 

• If Lump sum is selected, then one $1 benefit payment is made either immediately or later as determined by the deferral parameters (if the member survives to the payment date).  This form of payment is typically only useful for looking at deferred lump sum values, where the value is based on the interest rate(s) and probability of survival of the member. 

The three Fraction of Joint & Survivor benefit received when parameters (Both member and beneficiary are alive, Only the member is alive, Only the beneficiary is alive) indicate the fractions of the annuity payment amount ($1 per year in the case of Administration Factors) that are paid under the respective survivorship statuses.  For example, if there is no certain period and 1, 1 and 0.5 are entered for these parameters, respectively, then the payment form will be a 50% joint & survivor annuity.  In each case, enter 1 for 100%, 0.5 for 50%, etc..

Indicate when the Benefit commences (and temporary period begins) or Benefit commences (and certain period begins) or insurance Coverage commences (and temporary period begins) or lump sum Benefit paid, by selected one of the following:

• immediately, for no deferral

• at age, for deferral until the member has attained a specific age. Enter the age as a whole number.

• after number of years, for deferral until a specified number of years has elapsed from the current age. Enter the number of deferral years as a whole number.

Indicate when the Temporary period stops by selecting one of the following:

• not temporary, for annuity payment or insurance coverage extending to the end of the lifetime(s).

• at age, for annuity payment or insurance coverage that stops when the member has attained a specified age. Enter the age as a whole number.

• after number of years, for annuity payment or insurance coverage that stops when a specified number of years has elapsed since the commencement date. Enter the number of years as a whole number.

If applicable to the payment form, the Certain period text box specifies the certain period in integral years.

For joint life annuity payment forms, the Beneficiary Determined at parameter specifies whether the marital status is determined at current age or at the deferred commencement date.  The beneficiary will be assumed living at the time of determination.  If current age is selected, beneficiary mortality will be applied during the deferral period as well as after annuity payments commence. If commencement is selected, beneficiary mortality will not be applied until benefit commencement. 

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 the plan does not have a payment period COLA, then enter zero as the COLA rate.  Enter the COLA rates as a decimal (e.g., 0.03).  Select the Variable option to access COLA Rate Tables that have been entered under the Reference Tables command of the Input menu.  Select from the list of all COLA rate reference tables in the current Project or click the  button to create a new table. COLA rate tables for payment periods may vary by age, sex, and duration (time elapsed) since the commencement of payments.

The COLA rate during deferral period  is used to index benefits from the age entered on the Current Ages topic up to the payment commencement date.. Select the Constant option to specify a single COLA rate to apply to all years before payments start. If the plan does not have a deferral period COLA, then enter zero as the COLA rate.  Enter the COLA rates as a decimal (e.g., 0.03). Select the Variable option to access COLA Rate Tables that have been entered under the Reference Tables command of the Input menu.  Select from the list of all COLA rate reference tables in the current Project or click the  button to create a new table. COLA rate tables for deferral periods may vary by age and sex.

COLA Rate type indicates whether Compound interest (geometric) or Simple interest (arithmetic) COLAs apply. If next year's annual payment is determined by applying the COLA rate to this year's annual payment (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 (in the case of Administration Factors, $1) annual payment.

If the Conversion Factors box has been checked, the Normal Form of Payment parameter is accessible (unghosted) for you to select the payment form you wish to convert from.  Once you have defined at least one payment form, you may select from the multi-choice list of defined single life annuity, insurance or lump sum payment forms.  Joint life payment forms are not included in the list because ProAdmin does not support conversion from a joint life annuity to another payment form.  ProAdmin will produce factors to convert from the selected normal form to  each other payment form listed in this (Payment Forms) dialog box.  

The Blending Weights parameters allow you to blend male factor values with female factor values and/or to blend life factor values with joint life factor values.  If conversion factors are to be produced (in addition to annuity factors), ProAdmin first blends the annuity factors for the normal form of payment and the payment form you are converting to, and then produces the (blended) conversion factor by taking the ratio of the blended annuity factors.

Check the Blend male and female annuity factors box to have ProAdmin weight the male and female annuity factors and blend them into a single factor.  (Note that this parameter has no effect on results unless at least one of the mortality tables, or an underlying mortality improvement scale, selected under the Mortality and Timing Parameters topic is sex-distinct.) Enter the desired weight (a number between 0 and 1, inclusive) for a Male annuitant; ProAdmin will then enter the complement of this number for a Female annuitant.  For example, if your payment form is a life annuity and you enter 0.5, for ProAdmin to weight male and female factors equally, ProAdmin will compute separate male and female (primary) annuitant life annuity present values and then compute a blended value that is halfway between the male and female annuity present values.  If your payment form is a joint life annuity and you enter 0.5., ProAdmin will compute separate factor values for 1) a male primary annuitant with a female contingent annuitant, and 2) a female primary annuitant with a male contingent annuitant, and then 3) compute a blended value that is halfway between the male and female primary annuitant joint life annuity values. Note that this parameter cannot be used to blend male and female mortality rates and then use the blended mortality rates to compute a single, blended, annuity present value factor; to achieve this result, you should first produce a unisex mortality table, select it under the Mortality and Timing Parameters topic and, consequently, not check the Blend male and female annuity factors box. 

The Fraction of population receiving J&S (blends J&S factor with life annuity factor; applies only to J&S forms) box applies only to joint life factors. Check it to have ProAdmin return joint life factor values computed by weighting each joint life annuity value towards the single life annuity value for the same primary annuitant current age.  Enter the desired fraction (a number between 0 and 1, inclusive) that you wish ProAdmin to use to develop factors for a primary annuitant (plan member) who is Male; likewise, enter the desired fraction for ProAdmin to use for a Female primary annuitant / plan member.   (Note: If a fraction of 1 is entered, that would denote a plan member population all of whom are married and/or electing the joint and survivor payment form, with thus no weighting towards the single life annuity value. However, in this situation, you need not check the Fraction of population receiving J&S box for ProAdmin to produce a “pure” joint life annuity value.) For example, if you enter 0.8 for a Male primary annuitant and 0.6 for a Female primary annuitant, for ProAdmin to weight joint life factor values by 0.8 for male plan members and by 0.6 for female members (and thus weight life annuity values by 0.2 for male members and by 0.4 for female members), ProAdmin will compute separate life annuity and joint and survivor annuity present values and then compute the weighted value. For male members, that value will be two tenths of the way from the male primary annuitant joint life value to the male annuitant life annuity value; for female members, that value will be four tenths of the way from the female primary annuitant joint life value to the female annuitant life annuity value.

If you check both the Blend male and female annuity factors box and the Fraction of population receiving J&S box, to blend male and female annuity factors and also to compute each joint life factor value as partly weighted towards a life annuity, ProAdmin will first weight each joint and survivor annuity factor value towards the life annuity factor value and then blend the male and female joint life factor values into a single (unisex) value.