Plan Attributes - ProVal 319

OPEB mode

The Plan Attributes dialog box contains settings for features (attributes) that apply to the entire plan, rather than to some benefits (i.e., Benefit Definitions, in ProVal terminology) but not to others.

Medicare Coverage Age determines the age used in pre/post-Medicare liability splits and for pre/post-Medicare increase rates (i.e., trend). It is also the age at which lifetime and annual limits can be renewed. If age 65 is entered, for example, ProVal will separate the liability for payment ages through 64 from the liability for payment ages at or over 65. For spouses, Medicare eligibility age may be based on the member age or the spouse age. For the latter, choose the “member and spouse ages separately” option.

If you specify the Linear Proration to Decrement method for attribution of the Benefit Definition) under the projected unit credit cost method, by spreading the projected benefit as of the decrement age linearly over attribution service, the linear proration to decrement service based on parameter defines measurement of benefit attribution service. Note that this parameter has no impact on calculations under other cost methods. 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 a participant’s attribution period might not begin until a future date (such as for a newly hired employee if attribution service is not counted immediately from hire), you may prefer to specify a date field from which to attribute benefits to decrement age. Select the desired field from among the numeric and date fields unhidden in the current project or, if you need fractional service attribution (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.

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.

If the cost method is not projected unit credit and you do not need APBO results for your accounting Valuation, or if you do not select the Linear Proration to Decrement attribution method for any Benefit Definition in your Plan Definition, then you can leave the linear proration to decrement service based on parameter at the pre-set value that appears when you enter the Plan Attributes dialog box.

When you choose a method for Final Average Salary Calculation, keep in mind that ProVal considers the current salary field to contain the annual salary for the year beginning on the valuation date. Therefore, when the valuation date is the first day of the plan year, you probably wish to exclude current salary from the averaging period. (An exception would be a situation where the benefit earned during the plan year is considered accrued as of the first day of the plan year.) Similarly, when the valuation date is the last day of the plan year, you generally wish to have the averaging period end with, or include, current salary. In making the choice, consider, however, what data is contained in the current salary field. See Salary Definitions for details. ProVal also allows a third choice, the trapezoidal rule, which averages the current and prior final average salaries. In years where the history is at least as long as the averaging period, this includes in the average salary calculation half of the current salary and half of the salary at the beginning of the averaging period.

Covered Compensation and/or Average Wage Base Rounding Rule presents four choices for rounding the U.S. regulatory items social security covered compensation and average taxable wage base: no rounding, $12 multiple, $600 multiple or $3,000 multiple. If the “no rounding” choice is selected, ProVal will do an exact calculation of the covered compensation or average wage base. Rounding is performed under the last three options, so as to produce wage bases that are multiples of the dollar amount indicated. The result of a covered compensation or wage base computation (e.g., averaging 35 years of wage bases in a covered compensation calculation) by a ProVal operator (e.g., #CVCP, #SSWB or #AVGWB, to return an individual’s covered compensation, wage base, or average wage base, respectively) would be rounded according to the chosen rule and then used in building the benefit formula. Towards the end of each calendar year, the U.S. Internal Revenue Service publishes two tables of the following calendar year’s covered compensation: an “unrounded” table and a table rounded to $3,000 multiples. To choose the IRS unrounded table, select “$12 rule”; to choose the IRS rounded table, select “$3,000 rule”. ProVal’s “$600 rule” choice refers to rounded covered compensation tables (no longer published) of certain past calendar years. Although a calculation involving social security regulatory items is hardly ever part of an OPEB plan benefit formula, note that all of ProVal’s accrual basis formula operators are available in all modes. If social security items are irrelevant to your Plan Definition, you may leave this parameter at the pre-set value that appears when you enter the Plan Attributes dialog box. Note that the rounding rule applies only to the result of the averaging step of the computation; the wage bases themselves are not rounded according to this rule.