(See also Payment Form Definitions - pension modes.)

The parameters of this dialog box indicate, for both active and inactive members, the assumed payment form used to compute the value, as of the decrement date (active members) or the valuation date (inactive members), of the stream of benefit payments or member life insurance coverage, although the payment form indicated for inactive members is likely to reflect an actual election rather than an assumption. For benefits initiated by the “in-service” contingency , the parameters of this dialog box indicate the assumed payment form for computing the value of payments made or insurance coverage provided to the member while in active service.

Each Benefit Definition will refer to one of these Payment Form Definitions. The gross benefit and participant contribution formulas of the Benefit Definition determine the amount (i.e., the annual amount of benefit or claims payments or participant contributions, or the face amount of insurance) that will be valued under the payment form.

The payment form types available for member and spouse benefits (initiated by one of the four decrements or by the in-service contingency) are listed later in this article. For each type, both deferral of receipt of the payments or insurance coverage and temporary receipt may be indicated. Note that life contingencies apply to payments made during a temporary period; thus, a temporary period is a maximum length of time for which benefits are paid or insurance is in effect.

Each payment form type provides for benefit payments to, or insurance on the life of, either the member or the spouse. Life contingencies in the payment form therefore depend upon either the member’s or the spouse’s age and sex, respectively, and reflect the appropriate mortality (member or spouse). The joint life to spouse and reversionary payment forms provide benefit payments to the spouse contingent upon the member’s survival or death, respectively; life contingencies for these payment forms therefore reflect both member and spouse mortality. To apply spouse mortality for a payment form of an active Benefit Definition, ProVal assumes that the spouse’s sex is the opposite of the member’s and that the spouse’s age reflects the age difference specified by the Number of years husband is older than wife parameter of the Other Valuation Parameters topic of the Valuation Assumptions. To apply spouse mortality for a payment form of an inactive Benefit Definition, ProVal determines the spouse’s sex and age according to the parameter settings of the Inactive Data topic of the Census Specifications, which allows you to specify database fields containing the spouse’s sex and date of birth/age and/or an assumption as to the age difference between husband and wife (with the spouse’s sex assumed to be the opposite of the member’s).

For all payment form types, payments are discounted for survivorship according to the mortality tables specified for active mortality after decrement and inactive mortality under the Decrements topic of the Valuation Assumptions. Payments are also discounted for interest at the valuation interest rate(s) specified under the Interest Rates topic of the Valuation Assumptions.

For each annuity type, the benefit payment frequency is annual; the Timing of claims payment parameter of the Other Valuation Parameters topic of the Valuation Assumptions indicates whether the one payment assumed made each year is considered made at the “beginning of year”, “middle of year” or “end of year”.

The fraction of the active population assumed married and receiving a benefit with a payment form to the spouse is determined by the Fraction of population that is married parameter of the Other Valuation Parameters topic of the Valuation Assumptions. Whether an inactive record receives a benefit with a payment form to the spouse is determined by the parameter settings of the Inactive Data topic of the Census Specifications, which indicate whether there are covered spouses and either what code(s) indicate coverage or what fraction of each inactive record is assumed covered, and by the Eligibility parameter settings of the Benefit Definition, which define eligibility for the benefit.

Each Type of Payment Form Definition is described as follows:

• If Life Annuity to Member is selected, then the benefit is a series of payments to the member and its value depends upon member mortality during both the payment period and a deferral period, if any. Because payments are made to the member, ProVal looks up Benefit Component Table values based on the member’s age. Unless temporary receipt is indicated, payments are made for the member’s entire lifetime.

• If Life Annuity to Spouse is selected, then the benefit is a series of payments to the spouse and its value depends upon spouse mortality during both the payment period and a deferral period, if any. Because payments are made to the spouse, ProVal looks up Benefit Component Table values based on the spouse’s age. Unless temporary receipt is indicated, payments are made for the spouse’s entire lifetime.

• If Joint Life Annuity to Member is selected, then the benefit is a series of payments as long as both the member and spouse are alive. Its value depends upon joint life as well as spouse mortality, as applicable. That is, payments made during the joint payment period are discounted using joint life mortality during both the joint payment period and a deferral period, if any. Because payments are made to the member, not the spouse, ProVal looks up Benefit Component Table values based on the member’s age. Unless temporary receipt is indicated, payments are made for the entire joint lifetime. This payment form is applicable only to married members (or to the portion of a member assumed to be married); single members receive no payments under this form.

Note: This payment form may be used to value a “reversionary annuity to member”, that is, payments to the retiree after the death of the spouse. First set up a Benefit Definition with a Life Annuity to Member payment form and a Benefit formula that returns a positive value B. Then set up a Benefit Definition with a Joint Life Annuity to Member payment form and a Benefit formula that is the member (single) life Benefit formula with a minus sign applied to it (so that it returns the value –B). Include both Benefit Definitions in your Plan Definition.

• If Joint Life Annuity to Spouse is selected, then the benefit is a series of payments as long as both the member and spouse are alive, with an optional extension of payments during the spouse’s lifetime for a specified number of years after the member’s death. Its value depends upon joint life as well as spouse mortality, as applicable. That is, payments made during the joint payment period are discounted using joint life mortality during both the joint payment period and a deferral period, if any. Payments made during the extension period are discounted using spouse mortality during the extension period but joint life mortality during the joint payment period and a deferral period, if any. Because payments are made to the spouse, not the member, ProVal looks up Benefit Component Table values based on the spouse’s age. Unless temporary receipt is indicated, payments are made for the entire joint lifetime and extension period, if any. This payment form type is commonly used to code spouse medical benefits that cease when the member dies or a specified number of years thereafter.

Note: This payment form may be used for an inactive Benefit Definition only if the member is alive on the Valuation Date (i.e., the inactive record’s ProVal status is not “Survivor”). If the member has died on or before the Valuation Date and payments are extended to the spouse for a specified number of years, then, to value the continued payments, code the inactive record’s ProVal status as “Survivor”, leave the spouse data in the spouse fields of the record and create an inactive Benefit Definition with a Life Annuity to Spouse payment form that has a temporary period equal to the number of years of continued payments remaining as of the Valuation Date. Alternatively, to avoid having to change the number of years in the temporary life payment form for a particular inactive record when next year’s valuation is performed, code the temporary period as stopping at a spouse age equal to the spouse’s age at the member’s death plus the specified number of years of continued payments. Under the latter approach, separate inactive Benefit Definitions are needed for inactive records with different spouse ages at the date of the member’s death.

• If Reversionary Annuity to Spouse is selected, then the benefit is a series of payments after the member’s death either for the spouse’s entire lifetime or for only a specified (maximum) number of years during the spouse’s lifetime. Its value depends upon spouse mortality during both the payment period and a deferral period, if any, but upon joint life mortality prior to the member’s death. Because payments are made to the spouse, not the member, ProVal looks up Benefit Component Table values based on the spouse’s age. Unless temporary receipt is indicated, payments after the member’s death are made for the entire remaining lifetime of the spouse or for all the number of years specified for continuation after the member’s death. This payment form type can be used to code a joint and survivor annuity form (i.e., the benefit is a series of payments for as long as either the member or spouse is living); define two Benefit Definitions with (almost) identical parameters except for the Payment Form: Life Annuity to Member and Reversionary Annuity to Spouse, with a minus sign applied to the formulas(s) of the Gross Benefit Definition and/or Participant Contribution of the Benefit Definition with the reversionary annuity payment form.

Notes: This payment form may be used for an inactive Benefit Definition only if the member is alive on the Valuation Date (i.e., the inactive record’s ProVal status is not “Survivor”). If the member has died on or before the Valuation Date, then, to value the payments, code the inactive record’s ProVal status as “Survivor”, leave the spouse data in the spouse fields of the record and create an inactive Benefit Definition with a Life Annuity to Spouse payment form. If payments are made only for a specified number of years, then code a temporary period equal to the number of years of payments remaining as of the Valuation Date. Alternatively, to avoid having to change the number of years in the temporary life payment form for a particular inactive record when next year’s valuation is performed, code the temporary period as stopping at a spouse age equal to the spouse’s age at the member’s death plus the specified number of years of payments. Under the latter approach, separate inactive Benefit Definitions are needed for inactive records with different spouse ages at the date of the member’s death.

This payment form may be used for an active Benefit Definition initiated by a contingency other than death (i.e., the spouse is paid a life annuity upon the member’s death after another decrement from active status has occurred). If the contingency is death, however, then this payment form may not be used, because the spouse’s benefit reduces to a life annuity (payable upon the active member’s death, which has already occurred at the decrement date) and the payment form should be coded as Life Annuity to Spouse.

• If Life Insurance on Member’s Life is selected, then the benefit is payment of the face amount in a lump sum upon death of the member after a different decrement (retirement, disablement or termination) has occurred (e.g., if the decrement is retirement, then the benefit is retiree life insurance). Its value depends upon member mortality during both the insurance coverage period and a deferral period, if any. Because the insurance is on the member’s life, ProVal looks up Benefit Component Table values based on the member’s age. Unless temporary coverage is indicated, the insurance is in effect for the member’s entire lifetime.

• If Life Insurance on Spouse’s Life is selected, then the benefit is payment of the face amount in a lump sum upon death of the spouse after the member has decremented from active status; its value depends upon spouse mortality during both the insurance coverage period and a deferral period, if any. Its value does not depend upon member mortality, i.e., once the member decrements from active status, the spouse’s insurance is in effect as long as the spouse lives, regardless of whether the member is alive. Because the insurance is on the spouse’s life, not the member’s life, ProVal looks up Benefit Component Table values based on the spouse’s age. Unless temporary coverage is indicated, the insurance is in effect for the spouse’s entire lifetime.

• If Lump Sum to Member, No Life Contingencies is selected, then only one benefit payment is made, either when the decrement from active status occurs or later, as determined by the deferral parameters. The value of a deferred lump sum is the amount computed by the Formula of the Gross Benefit Definition, offset by the amount computed by the Formula of the Participant Contribution (if any), discounted with interest only from the specified deferral age, or for the specified number of years, to the date of decrement.

• If Lump Sum to Member, Life Contingencies is selected, then only one benefit payment is made, either when the decrement from active status occurs or later, as determined by the deferral parameters. The value of a deferred lump sum is the amount computed by the Formula of the Gross Benefit Definition, offset by the amount computed by the Formula of the Participant Contribution (if any), discounted with interest and member mortality from the specified deferral age, or for the specified number of years, to the date of decrement.

When the Type is selected, the rest of the dialog box will change to present only the parameters applicable to the selected form. The additional parameters define deferral, a temporary period and, for the joint life and reversionary life forms, continuation of payments after the member’s death.

Indicate when the Benefit commences (and temporary period begins) or insurance Coverage commences (and temporary period begins), by selecting either immediately upon decrement (for no deferral, i.e., benefit payments commence or insurance coverage starts when the decrement from active status occurs), at member age (entered as a numeric value or Plan Constant, for deferral until the member has attained a specified age), at spouse age (for deferral of a form paid to the spouse, or of the joint life annuity paid to member type, until the spouse has attained a specified age) or after number of years from decrement (entered as a numeric value or Plan Constant, for deferral until a specified number of years have elapsed since the decrement date). If deferral is until a specified age, enter the first age at which a payment is made or insurance coverage is in effect. If a member decrements at an age beyond a commencement age indicated by the deferral parameter, there will be no deferral of benefit payments or insurance coverage. Note that if the payment form is Joint Life Annuity to Spouse and the member dies during the deferral period, there will be no benefit payments to the spouse unless the payment form includes continuation of payments for a sufficient number of years to extend payments past the annuity commencement date indicated by the deferral parameter. Similarly, if the payment form is Reversionary Annuity to Spouse and the member dies during the deferral period, there will be no benefit payments to the spouse until the deferral period expires; furthermore, if the maximum number of years, if any, for which payments will be made runs out before the end of the deferral period, there will be no benefit payments to the spouse.

Note: For inactive records, ProVal obtains the date of decrement from active status from the contents of the field chosen for the Date of decrement (or decrement age) parameter of the Inactive Data topic of the Census Specifications. There is no default setting for this parameter; you must select a database field. If a date field is specified, the date must be no later than the Valuation Date. If an age field is specified, the age must be no later than the member’s age on the Valuation Date. Otherwise, the record will be excluded from processing. Note that decrement prior to the Valuation Date means that “immediate” commencement occurs prior to the Valuation Date; consequently, deferral for a number of years could indicate a commencement date prior to the Valuation Date.

Fractional commencement ages will be rounded.

Indicate when the Temporary period stops by selecting either not temporary (for benefit payments or insurance coverage extending to the end of the lifetime), at member age (for benefit payment or insurance coverage that stops when the member has attained a specified age), at spouse age (under a form paid to the spouse, or under the joint life annuity paid to member type, for benefit payment or insurance coverage that stops when the spouse has attained a specified age) or after number of years (for benefit payment or insurance coverage that stops when a specified number of years have elapsed since the commencement date). If the temporary period ends at a specified age, enter the first age at which a benefit payment will not be made or insurance coverage will no longer be in effect. The temporary period begins on the commencement date indicated by the deferral parameter; thus, if you specify a temporary period that ends at an age prior to a specified commencement age, then there will be no benefit payments or insurance coverage. Note that if the payment form is Joint Life Annuity to Spouse with continuation of payments for a specified number of years and the member dies during the temporary period, payments to the spouse will stop at the earlier of the end of the temporary period and expiration of the number of years of continuation. Similarly, if the payment form is Reversionary Annuity to Spouse with continuation of payments for only a specified number of years and the member dies during the temporary period, payments to the spouse will stop at the earlier of the end of the temporary period and expiration of the number of years of continuation. If the payment form is Reversionary Annuity to Spouse and the member dies after the end of the temporary period, there will be no benefit payments to the spouse.

Fractional temporary periods will be rounded.

If the payment form is Joint Life Annuity to Spouse, check the Payments after member’s death continue for box to extend payments to the spouse after the joint lifetime of the member and spouse. Also specify the number of years, up to 50, for which payments continue during the spouse’s lifetime after the member’s death.

If the payment form is Reversionary Annuity to Spouse, select Payments after member’s death continue for life of spouse if payments are made for the spouse’s entire lifetime. Select the continue for option if payments to the spouse stop after a specified number of years. Also indicate the number of years, up to 50, for which payments are made during the spouse’s lifetime after the member’s death.

If the payment form is Life Insurance on Member’s Life, the Only paid if member dies "before" or "after" spouse parameter lets you specify a "first to die" or "last to die" insurance benefit, respectively.  If you select "before", then the benefit is paid only if the spouse is alive at the time of the member's death (i.e., the member dies first).  If you select "after", then the benefit is paid only if the spouse has already died at the time of the member's death (i.e., the member is the last to die).  In either case, this benefit is not paid to single members. 

If the payment form is Life Insurance on Spouse’s Life, the Only paid if spouse dies "before" or "after" member parameter lets you specify a "first to die" or "last to die" insurance benefit, respectively.  If you select "before", then the benefit is paid only if the member is alive at the time of the spouse's death (i.e., the spouse dies first).  If you select "after", then the benefit is paid only if the member has already died at the time of the spouse's death (i.e., the spouse is the last to die).