An Inactive Benefit Definition specifies the amount of pension payment or life insurance coverage, the form on which it is paid, and applicable Guaranteed Minimum Pension (GMP) and Pension Protection Fund (PPF) information.

Name is a text field in which to enter a description of the benefit. This may be any descriptive phrase, including spaces.

The Annual benefit amounts section allows you to specify the service tranches for each Inactive Benefit Definition, as long as these benefits have the same payment form parameter settings. (Any tranches with a different payment form can be specified in a separate Inactive Benefit Definition.) For each tranche, specify:

• Tranche – Description of the 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.

• Benefit at Valuation – The numeric database field containing the total benefit amount (including any GMP), revalued to the valuation date. In the case of deferred members, do not include any minimum revaluation from date of exit, which ProVal will apply automatically to the Bft at exit (Deferreds) defined below.

• Bft at Exit (Deferreds) – The numeric database field containing the benefit amount (including any GMP) at exit. This field is required (and used) only for benefits where a deferred payment form applies (for example, life annuity with non-immediate commencement, or life insurance, or post-decrement death benefit with assumed member retirement age > 15).

• Pre-88 GMP at Valuation – The numeric database field containing the Guaranteed Minimum Pension earned before 6 April 1988, revalued with GMP increases to the valuation date. In the case of deferred members, do not include any minimum revaluation from date of exit, which ProVal will apply automatically to the Pre-88 GMP at termination defined in the inactive data. If no pre-88 GMP applies to this service tranche, select “<none>”.

• Post-88 GMP at Valuation – The numeric database field containing the Guaranteed Minimum Pension earned after 5 April 1988, revalued with GMP increases to the valuation date. In the case of deferred members, do not include any minimum revaluation from date of exit, which ProVal will apply automatically to the Post-88 GMP at termination defined in the inactive data. If no post-88 GMP applies to this service tranche, select “<none>”.

• ERF Table on Notional GMP – The Benefit Component Table containing the early retirement factors to be applied to the notional GMP (e.g., for purposes of Barber equalization). These are typically the same factors applied to the total pension within the respective database field, 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 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 in the case of benefit commencement prior to GMP age).

The Payment form section describes the forms in which the benefit is paid.

Select whether Commutation applies to member annuities if Vested status. If the box is checked, a portion of the benefit will be commuted and paid as a lump sum upon commencement, for members whose ProVal status is “Vested”. Specify the parameters used to calculate the commuted portion of the benefit under the Commutation topic of the Valuation Assumptions command.

The Payment form may be determined in one of two ways. Often, a Payment form field exists, that is, a coded database field with a code corresponding to each payment form. In other cases, select the option of a Single payment form for all records.

If you specify a Payment form field that describes the payment forms, then the box below the Payment form field parameter will list, on the left side, the labels that you entered in the Data Dictionary for the codes of that field. For each of these labels, identify the associated ProVal payment form by clicking the list item and completing the next dialog box. That dialog box will map the entry of your coded database field to the ProVal payment form that you describe.

If you specify a Single payment form for all records, then click the Parameters button. This will lead to another dialog box, in which you describe the ProVal payment form. See Inactive Payment Form - Pension Modes for more information.

In the PPF parameters section, specify the following for each Tranche:

• PPF interest – The set of in-deferment and post-commencement PPF interest rates that should be used. 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.

• NPA for Retirees – The (integer) Normal Pension Age for participants in payment status on the valuation date. This parameter is used only for Retired participants and only for determining the age when the PPF cap no longer applies. (For Vested participants, the PPF cap is applied only if the valuation age is less than the commencement age of this benefit. For Disabled and Survivor participants, the PPF cap is never applied.) See the “Pension Protection Fund Liability (Section 179)” article for more information about how the PPF parameters will be used.