Plan Attributes
(See also Plan Attributes - OPEB mode.)
The Plan Attributes topic, or Plan Attributes button in the German pension mode, 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.
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 rule, $600 rule or $3,000 rule. 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. If social security is irrelevant to your Plan Definition, you may leave this parameter at the pre-set value that appears when you enter this dialog box. (Although a calculation involving social security regulatory items would be an uncommon part of a Canadian registered, German or UK pension Plan Definition, all of ProVal’s custom operators are available in all modes.) 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.
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.
Benefit payment frequency affects inactive benefits as well as active benefits, even though inactive benefits are not determined by the Plan Definition. ProVal assumes that benefit payments will be made in equal installments throughout the year. Regardless of your selection for this parameter, all benefit amounts defined in ProVal should be annual. See Present Values: Benefits payable (m)thly for details about how this parameter is used.
Annuity payment timing indicates payment at the beginning or end of the payment period defined by the Benefit payment frequency parameter. Like that parameter, it affects inactive benefits as well as active benefits. Select “Beginning of period” for an annuity-due or “End of period” for an annuity-immediate.