pension modes

The eligibility requirements specify what criteria an employee needs to have met at the time of decrement in order to receive a benefit. Note that this does not describe the requirements for commencement of the benefit. For example, the eligibility requirement for a terminated vested benefit might be completion of 5 years of service with no age requirement, even though the benefit does not start until age 65. The Eligibility criteria state that an employee needs at least 5 years of service at termination to ultimately receive the benefit; the payment form will indicate commencement at age 65.

Conditions (no less than) and Exceptions (no more than) determine when an employee becomes eligible and ineligible, respectively, for the benefit. The grids allow you to specify Age, Service, and Points (age + service) criteria as numeric values or Plan Constants for eligibility; each row is interpreted as having “and” linking the requirements. For example, someone must both be 55 years old and have 10 years of service to be eligible if the row has 55 and 10 in it. An individual is considered eligible at the earliest satisfaction of two rows from the grid. For example, to be eligible, someone need be 65 years old or be 62 years old with 10 years of service if there are two rows, one row that specifies age 62 and 10 years of service and another row that specifies age 65.

Exceptions are most often coded in the situation where there are multiple benefits for a single contingency. For example, suppose that two retirement benefits are included in a plan: a basic benefit with eligibility requirements of 55 and 10 and an enhanced benefit with requirements of 55 and 30. You must exclude people eligible for the second benefit from receiving the first benefit. In other words, the first benefit has conditions of 55 and 10 but exceptions of 55 and 30. The second benefit has conditions of 55 and 30, and no exceptions.

For benefits with an “In-Service” contingency, under Exceptions, a check box is available to indicate that people are Eligible for only one year. When checked, this box indicates that eligibility ends one year after the eligibility conditions are first met. This overrides the entries in the Exceptions table. It is useful for the common case that benefits are payable only in the year when eligibility Conditions are first met.

In pension modes other than German mode, as soon as an employee meets the eligibility requirements for any retirement benefit in the plan, ProVal will no longer subject the employee to the termination decrement. You need not manually enter this as an exception to the termination benefit. Similarly, ProVal will not subject an employee to the retirement decrement until he or she becomes eligible for a retirement benefit. In German mode, this applies only to retirement benefits in Benefit Promises of the “Pension” type; if there are no Pension promises, i.e., all promises are of “Jubilee” type, benefit eligibilities do not affect decrements as specified in Valuation Assumptions.

In German mode, if the Benefit Definition is included in a Jubilee promise, there are automatic exceptions that will apply to death, disability and retirement benefits in addition to the Exceptions entered. ProVal will examine the eligibilities for all In-Service benefits included in all Jubilee promises contained in the Plan Definition. Eligibility for each death, disability and retirement benefit in a Jubilee promise will be “turned off” at eligibility for the next available In-Service benefit. For example, if the eligibility for a death benefit begins at 22 years of service, and there is an In-Service benefit whose eligibility begins at 25 years of service, then there will be an automatic exception for the death benefit at 25 years of service.

Age requirements always refer to the participant’s age, although you may be defining eligibility for a benefit payable to the spouse (such as a benefit initiated by death, rather than retirement).

Satisfaction of eligibility criteria is determined with no rounding. For example, an individual 54.9 years old will not be considered to have met an age 55 requirement. If you wish to apply specific rounding requirements for age, you may code the age requirement as 54.5. If you wish to apply specific rounding requirements for service, use a Service Definition.

If there are multiple eligibility criteria based on different definitions of service (for example, age 55 and 10 years of union service or age 60 and 5 years of salaried service), or there are other complexities that render the eligibility criteria grids inadequate to define eligibility completely, one approach to setting the eligibility parameters is to calculate an eligibility date and/or exclusion date for each employee and put the date in a database field. You may then select this field for the or earlier date parameters of the Conditions and/or Exceptions sections, as appropriate. An individual is considered eligible, or excluded, at the earliest satisfaction of the date field or of a row from the grid. Alternatively, if the grid is insufficient only because of differing definitions of service for its rows, you might not need to calculate an eligibility date or exclusion date; see the discussion below of the Service Overrides button.

The Eligibility service parameter determines how to measure service when applying service-based and points-based eligibility requirements. You may specify either a database Field or a Service Definition. If you specify a Field, you may refer to a date field from which to calculate service or to a numeric field containing service at the valuation date. However, particularly if eligibility service for this Benefit Definition is not counted immediately from hire (e.g., eligibility service for vesting measured from the later of hire date and age 21), you may prefer to specify a date field. Select the desired field from among the numeric and date fields unhidden in the current Project or, if you need fractional service accruals (e.g., hours-related service) or rounding (e.g., count partial years as full years), select from the library of Service Definitions. The button accesses the library to create and modify Service Definitions.

If there are multiple eligibility requirements for which the grid parameters are adequate except for differing definitions of service for the rows (for example, age 55 and 10 years of service from hire or age 60 and 5 years of plan participation), then, to specify an alternative service for a particular grid row, click the Service Overrides button, which leads to the Eligibility Service Overrides dialog box. The Eligibility section of this dialog box lists each row of the Conditions and Exceptions grids, displaying the row Type (condition or exception) and the Age / Service / Points values entered in the grid. To override service for an eligibility Condition or Exception, click one of the entries below, which leads to another dialog box in which you select a Field or Service Definition to use in lieu of the selection, otherwise applied to all rows of the grid, under the Eligibility service parameter of the Benefit Definition. After selecting the alternative eligibility service, click OK, to return to the Eligibility Service Overrides dialog box, which now displays your selection for the grid rows in the Service Override column. (You may remove an eligibility service override by selecting the grid row it applies to and clicking the Erase button.)

Note that if any eligibility conditions or exceptions have service overrides, the attribution option for unit credit and projected unit credit liabilities cannot be selected as linear proration to benefit eligibility.

Click OK to return to the Benefit Definition dialog box, which now displays a check mark on the Service Overrides button, to indicate that the definition of eligibility service has been overridden for at least one row in either the Conditions or Exceptions grid.

Service will be anticipated to increase by one year per calendar year, or, if you have specified a Service Definition, service will be anticipated to increase according to the Service accruals parameter of the Service Definition.

Note that the point in time at which eligibility is evaluated differs according to whether active decrements are assumed to occur at the beginning or the middle of the year, as determined by the setting for the decrement timing parameter (found under the Decrements topic of Valuation Assumptions and, for experience in a Core Projection, under the Decrements topic of Projection Assumptions), although there is another parameter that applies in the case of vested liabilities (see the Technical Reference article entitled “Vested liability calculation”). Therefore, age, service and points might be accumulated up to the valuation date, or perhaps up to the decrement date (valuation date + 6 months) under mid-year decrement timing.

If some active records (e.g., a plant location or division) are ineligible for the Benefit Definition, enter a Selection expression (i.e., a database expression that selects records according to the values in a database field or fields) to specify which records receive this benefit (if other eligibility conditions are met). Alternatively, you may retrieve a Selection Expression previously saved under the Selection Expressions command of the Database menu. Only records that meet the selection criteria of the database expression will receive the benefit. If the Selection expression is blank, all records are considered potentially eligible for this benefit.

To retrieve a previously saved Selection Expression, click the button to access the Retrieve Selection Expression dialog box, which lists the Selection Expressions saved in the current Project. Click the name of the desired Selection Expression to return to the Benefit Definition dialog box, where the Selection Expression is now entered in the expression box.