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Decrement Tables

Mortality, Disability, Termination and Retirement Rates

“Decrement” refers to the way that a plan participant’s status changes. Active participants, i.e., the database record’s status is mapped to ProVal’s active status, are potentially subject to four types of decrement (contingencies): death (mortality), disability, termination and retirement. Inactive participants, i.e., the database record’s status is mapped to a ProVal inactive status, and active participants after a decrement from active status has occurred are subject only to mortality. Note that participants with the "Vested valued through active" status are subject to both mortality and retirement decrements. (For more information, see the Status Code Mappings topic of the Census Specifications.)

Rates for all types of decrement are entered through the same (table) interface. For active participants, the rates of decrement may vary by age, service, age and service (i.e., the table is select and ultimate) and sex. For inactive participants, the rates may vary by age and sex. Furthermore, you may apply improvement scales to mortality rates. Improvement scales can be applied with generational projection or to a fixed end year. For more information, see Mortality Improvement Scales. For both active and inactive participants, mortality rates for any age may vary with the participant’s year of birth; this “age by year of birth” option is available also for disability rates (which currently apply only to active participants). See Table Interface for details about constructing tables and entering their values.

All retirement rate tables must contain the value “1” at some age (called the “100% retirement age”) under age 101; termination rate tables may contain a “1” before this retirement age. 

In retirement, termination, and disability decrement tables, you may apply a scaling factor that varies by individual to the rates. Check Scale rates by database field and select the database field that contains the scaling factor. Any rates that equal 1 in the original table will be preserved and scaling at those points will be ignored.

Different rate tables may be used for different calendar years of decrement or different tables may be selected for different values of a coded field in the database. See Additional Decrement Parameters, under the Decrements topic of Valuation Assumptions, for details about decrements that vary by calendar year or according to the contents of a coded field.

The decrement tables that you enter may contain either rates or probabilities. For details, see the Technical Reference article entitled Decrements: rates vs. probabilities.

ProVal looks up table values based on the participant’s age and service as defined by the Date of birth (or attained age) and Date of hire (or hire age) parameters, respectively, of your Census Specifications. The former parameter applies to both active and inactive participants. The latter parameter applies only to active participants. Furthermore, an active participant’s service is computed as the difference between attained age and hire age. Age and service for table lookups are always computed as whole (not fractional) numbers. For details, see Active Data , Inactive Data - pension modes and Inactive Data - OPEB mode.

When an age by pre/post-commencement mortality table is specified in the pension modes, ProVal uses the pre-commencement mortality probabilities during the deferral period (if any), as defined by the payment form for each benefit (i.e., for each active Benefit Definition and each Inactive Benefit Definition), and post-commencement mortality thereafter. Note that:

When an age by pre/post-commencement mortality table is specified in OPEB mode, the pre-commencement and post-commencement probabilities are applied instead as pre-decrement and post-decrement, respectively.

For some purposes, ProVal uses the “overall” mortality for a participant with respect to the aggregate of all of the participant’s benefits. For example, if there are multiple benefits for a particular decrement cause and decrement age (e.g., both a monthly pension/annuity and life insurance coverage are provided upon retirement), the participant is deemed to have commenced receipt of benefits, in the aggregate, if any of his/her annuity benefits have commenced as of the valuation date. In this situation, the “aggregate” definition is used to select mortality rates (pre-commencement versus post-commencement) for purposes of determining life expectancy, pension head counts for display purposes and, in a Core Projection, the proportion of initial inactive participants (i.e., the record’s status is inactive on the initial, or baseline, Valuation Date) assumed present on each future valuation date (aka initial inactive experience head counts). Mortality for decrementing active experience head counts, by contrast, is determined on a benefit by benefit basis. That is, the proportion of active participants (whether present on the initial Valuation Date or new entrants who came into the plan afterwards) assumed present on each future valuation date is determined using, perhaps, both a pre-commencement and a post-commencement mortality rate at the same age, depending on the benefit that will be initiated at that age.

The following mortality tables are automatically included in an existing ProVal client, when the client files are updated, and in every new ProVal client. The name of each begins with the abbreviation of its issuing body (e.g., "SOA"). The tables may be hidden from the current Project; click the Unhide button to gain access. You cannot erase, or save changes to, mortality tables that are automatically included in a ProVal client. These are the currently available tables:

The following tables are base rates only as published by the CIA Pension Experience Subcommittee February 2014 and do not have the improvement scale or any size adjustment factors built in.
The following tables are linked to the relevant base rates and include the applicable improvement scale. Note that size adjustment factors, as published by the CIA Pension Experience Subcommittee February 2014, have been pre-filled under the mortality linkage Advanced parameters. If you wish to apply them, select the radio button to apply a database field adjustment factor and check the box to transform the values based on the spreadsheet provided. Because the table is protected, the resulting table with size adjustment factors must be saved under a new name.

Mortality tables have several parameters that do not pertain to other decrement tables, to facilitate building base mortality rates from those in another mortality table, applying a mortality improvement scale, and applying mortality rates that vary with the valuation date (dynamic tables). These parameters are described below:

Linking Mortality Base Rates

Check the Link mortality base rates box if the mortality table you are building is a modification based on previously existing underlying tables. When you check the box, the spreadsheet values and Options button will become inaccessible; click the Parameters button to specify the linkage parameters.

In the Mortality Table Base Rate Linkage Parameters dialog box, select the mortality table from which Pre-commencement base rates are drawn, from the list of mortality rate reference tables (all types except for service-based tables, which do not have an age dimension) unhidden in the current Project. Tables that were produced by linking with other base mortality rates may not be used as the source of base rates and thus do not appear in the list. If the selected table is of the "Age by Pre / post-commencement" type, only the pre-commencement rates will be extracted here (post-commencement rates are discussed separately below); alternatively, if the selected table is of the type "Age by Service", "Age by Year of Birth", or "Age by Duration from Decrement", parameters related to separate post-commencement mortality rates are inaccessible.

If a sex-distinct table has been selected, specify whether you want to Transform to unisex, blending specified weights. Enter the percentage weight of male rates, and the complementary percentage weight of female rates will populate. For example, you could create a new unisex mortality table that blends 80% of male and 20% of female rates from an existing mortality table.

You may shift the base rates by a specified number of years, to reflect an Age setback, separately for Male and Female rates. Note that a negative age setback will be applied instead as a set-forward. For example, a setback of -4 will set the base rate at age 40 equal to the original rate for age 44. For no age set back, enter 0.

The base rates can be further adjusted by a multiplicative Adjustment factor, either Constant (separately for Male and Female rates), or a Database field that can vary by individual. (For no scaling adjustment, enter constant adjustment factors of 1.) If a database field is selected, click the (now accessible) Advanced button and complete the available parameters, for modifying the field value before adjustment. First, select whether you would like to Transform database field values into adjustment factors. This can be useful, for example, if the database field contains raw data of some sort (e.g., benefit amount) that should be converted into the multiplicative adjustment factors rather than applied directly. Enter the appropriate breakpoints in the grid that becomes accessible. Note that if the database field represents members' benefit amounts, these amounts are used directly as entered on the data and are not adjusted for future COLA increases. Second, check the For missing database field values, use factors box, if you would like to specify default values, entered separately for Male and Female rates. This could be useful, for example, in the Canadian paradigm where the database field values represent benefit amounts for inactives, but no benefit amounts are available for active participants and an aggregated or averaged value should be used instead. Third, select if you would like to Grade factors linearly between two specified ages. This will linearly grade factors from those specified to 1.000, beginning after the first age specified and reaching 1.000 at the second age specified.

Next, click OK to return to the Mortality Table Base Rate Linkage Parameters dialog box. If the Same as pre-commencement box is accessible (i.e. the pre-commencement base rates are of the “Age” or “Age by Pre / post-commencement” type, or are set to “<no rates>”), check it if you wish to set Post-commencement base rates equal to pre-commencement base rates. Otherwise, the same parameters as provided for pre-commencement rates are available for post-commencement rates. Note that existing active members who transition to inactive status in future years will be subject to these (potentially disparate) post-commencement parameters for mortality rates after commencement and the pre-commencement parameters specified above will no longer apply to them. (Therefore, if a Database field, such as benefit amount, is specified for a post-commencement Adjustment factor, actives transitioning to inactive status need a value in this benefit amount field, unless you specify an average adjustment factor to be used in place of missing database field values.)

When you click OK, to return to the Mortality Rate Table dialog box, the table you are building will populate with the newly-linked values. Note that you must uncheck the box if you wish to further modify the values or examine them in more detail.

Note that if you edit the source table, i.e., the table selected to provide the base rates, those changes will modify this linked table automatically; thus results from a Valuation or Core Projection referencing this linked table will be erased, as will the base rate parameter settings of the linked table (though the linked table’s mortality rates still will be visible when the linked table is viewed).

Mortality Projection

Check the Apply Improvement Scale box to apply rates of annual improvement in mortality experience to the mortality base rates, to create either a fully generational table or a static table reflecting mortality improvement to a particular year (typically in the future, although you may specify a year in the past). You may apply an improvement scale only to a table of the “Age” or “Age by Pre / post-commencement” type.

Select a Pre-Commencement improvement scale from the list of scales available in ProVal’s Mortality Improvement Scales library, or click the image/backdoor_button.gif button to access the library, in which you may create new improvement scales or modify existing ones. Enter the (pre-commencement) Base year (year from which you are projecting) in the text box. Similarly, select a Post-Commencement improvement scale, accessing the library by means of the image/backdoor_button.gif button if desired, and enter the (post-commencement) Base year.

For Projection, select either Fully generational, to project mortality improvement indefinitely into the future, or To year, to project from the base year only to the specified year. See the Technical Reference article entitled Mortality improvement (generational mortality) for details about the calculation of projected mortality rates.

If a fully generational improvement scale is applied, then a drop-down arrow appears to the right of the View button. Click the View button, or click the arrow and select View table, to display the mortality table and parameters as they were input. Associated mortality improvement scale rates will be displayed following the base mortality rates display. To view mortality rates at all ages for an individual who will be age x in calendar year y, click View table for an individual and, when prompted, specify the individual's age and the valuation year in which it is attained; then click View. ProVal will display the projected mortality rates for an individual who is that age in that calendar year. To view projected mortality rates at all ages in a calendar year y, use the Administration Factors Tool, as described in the FAQ Help article entitled "Mortality rates with improvement scale".​

Dynamic Mortality

U.S. Internal Revenue Service guidance specifies the mortality tables to be used for valuing Target Liabilities and for determining lump sums under the Pension Protection Act of 2006 (PPA). Certain tables permissible or required in the regulations are static tables, meaning that generational projection is not applied. These static tables are updated by the IRS annually to reflect mortality improvements. 

To create a new dynamic mortality table, click the drop-down arrow of the New button and select Dynamic:

Select whether the IRS base rates and projection methodology should be the 2018 methodology (see 2018+ Dynamic Mortality) or the 2008 methodology (see 2008+ Dynamic Mortality).

Select the Blend type from the following three options:

  1. None. This produces a sex distinct pre/post commencement table similar to the Static Mortality (dynamic) tables.
  2. Pre/post combined (Small plan). This produces a sex distinct table similar to the Small Plan Combined Static Mortality (dynamic) tables.
  3. Unisex pre/post combined (417(e)). This produces a unisex table similar to the Applicable Mortality for 417(e) (dynamic) tables.

The Improvement scale grid is variable by calendar year of the valuation date. For each year in a row, the table selected for that row is applied from the year of the base rates to the year of the valuation date. This example (created prior to publication of the MP-2018 improvement scale) is the IRS 2018-2019+(MP16-17) Static Mortality (dynamic) table with an estimated MP-2018 improvement scale to calendar years 2020 and beyond.

Check the Zero out pre-commencement rates/probabilities box if you wish to set the pre-commencement rates to zero.

Check the Freeze improvements in year box if you wish to freeze the improvement rates in a particular calendar year. The improvement rates will stay the same for calendar years after the year you enter.

Note: these tables are used to calculate static mortality table values as of the valuation date, based on the specified rules. However, if you elect to have lump sum and optional form conversion factors calculated as of decrement date, then the dynamic table will use the static table as of the decrement year.