Benefit Tranches
This part of the Benefit Definition allows you to specify the service tranches (and all parameters that vary by tranche) for the Benefit Definition. Enter values or make selections for the following parameters, which appear in columns of the tranche spreadsheet:
Tranche -- allows you to enter a clear description of each tranche, frequently a service period (for example, “Pre-1997”). This description will be used only for presentation purposes in ProVal’s output and sample life exhibits. ProVal will NOT apply any special treatment to a tranche based on its description. Note that when the cursor is in this tranche’s row, the description entered in the Tranche column appears after Benefit formula for above the expression box for the benefit formula, and the expression box displays the benefit formula for this tranche.
Benefit Formula -- defines the benefit amount at decrement date for each tranche. To edit the benefit formula for a given tranche, click one of the tranche’s parameters in the spreadsheet and make your edits in the Benefit formula expression box under the spreadsheet. The spreadsheet will update automatically when you exit the Benefit formula expression box; note that any formulas comprising multiple lines will have only their first line displayed in the spreadsheet. For more information on working with ProVal’s benefit formulas, see Benefit formula – pension modes.
Pre-88 GMP at Valuation and Post-88 GMP at Valuation -- allow you to specify the numeric database fields containing the Guaranteed Minimum Pension (GMP) earned before 6 April 1988 and after 5 April 1988, respectively, that should be applied to each tranche. The GMP values in the selected database fields should be revalued with in-service GMP increases to the valuation date. For either column, select “<none>” if it does not apply (e.g., if this is a post-1997 benefit). If there are multiple pre-1997 tranches (for example, “pre-1990” and “1990-97”), you can use your GMP amounts directly from your data (for example, “GMP pre-1988”, “GMP 1988-90” and “GMP post-1990”). If the GMP data is not split between pre-1997 tranches, you can create the split yourself by using the Define Field by Expression command within your database.
ERF Table on Notional GMP -- allows you to adjust the notional GMP with the scheme’s early retirement factors (e.g., for purposes of Barber equalization). These are typically the same factors applied to the total pension in the benefit formula, so that the excess pension at benefit commencement age (i.e., total pension minus notional GMP) is adjusted consistently. Select from the list of Benefit Component Tables unhidden in the current Project or click the Table Library button to access the Benefit Component Table library, in which you can create new tables or modify existing ones. Note that the early retirement factors specified here will be applied only to the notional GMP (that is, only as part of calculating the excess pension if benefit commencement precedes GMP age).
For benefits initiated by the termination contingency, also specify the PPF Interest Category, to define which set of in-deferment and post-commencement Pension Protection Fund (PPF) interest rates should be used for each tranche. For example, if the category “1997 to 2009” is selected, ProVal will use the PPF in-deferment interest rate applicable to pre-2009 benefits and the PPF post-commencement interest rate applicable to post-1997 benefits. The actual PPF interest rates are defined under the Interest Rates topic of the Valuation Assumptions (if the Applicable law is set to “PPF”). See Pension Protection Fund Liability (Section 179) for details.