The Transfer Value Liability topic of funding Valuation Assumptions specifies the interest and mortality rates used to discount benefit payments to the valuation date to derive the transfer value portion of the solvency and windup liabilities. If the windup liability uses a different interest rate, that value can be input in the Windup Liability Interest Rates topic. For guidance, see the applicable provincial legislation and promulgations (standards of practice, educational notes, etc.) of the Canadian Institute of Actuaries. For details about ProVal’s methodology for computing the solvency and windup liabilities, see the Canadian Solvency Liability calculations Technical Reference article.
The Interest Rates are annual forward interest rates, entered as Variable by duration from the valuation date. Enter the rates that specify the annual (forward) interest rates to be used to discount benefit payments. A grid is provided in which to enter two or more interest rates. Complete a row for each rate. For example, if the interest rate is 6.5% for the first 10 years after the valuation date and 6% thereafter, then enter:
| From | Up to | Rate |
| -- | 10 | 0.065 |
| 10 | -- | 0.060 |
ProVal fills in the Up to column automatically, and the last rate will be used for the last year entered and all years thereafter, up to the date of each payment. Note that the From box in the first row cannot be completed. In our example, if the valuation date is 1/1/2007, the interest rate used to discount a benefit payment back to 1/1/2007 will be 6.5% until 1/1/2017 and 6% from 1/1/2017 on (regardless of when the decrement initiating benefit payment is assumed to occur). Thus a benefit payment made on 1/1/2020 will be discounted for 3 years at 6% (to 1/1/2017) and for the next 10 years at 6.5% (to 1/1/2007). Our example involved only two interest rates: if you have several interest rates for the period between the valuation date and the payment date, you may need to press the ENTER key, to create a new row, when you get to the bottom of the spreadsheet.
If you wish to compute the transfer value solvency liability on a constant interest rate basis, then simply enter the same interest rate in both rows of the grid.
Note that in a Core Projection with a (baseline) Valuation Date of, for example, 1/1/2007, the coding of our sample grid, using two interest rates, will produce:
| Valuation date in a projection | |||
| Year of decrement | 1/1/2007 | 1/1/2008 | 1/1/2009 |
| 2007 | Discount factor @ 6.5% for 10 years, 6% thereafter | ||
| 2008 | Discount factor @ 6.5% for 9 years, 6% thereafter | Discount factor @ 6.5% for 10 years, 6% thereafter | |
| 2009 | Discount factor @ 6.5% for 8 years, 6% thereafter | Discount factor @ 6.5% for 9 years, 6% thereafter | Discount factor @ 6.5% for 10 years, 6% thereafter |
| --------- | |||
| 2017 | Discount factor @ 6% | Discount factor @ 6.5% for 1 year, 6% thereafter | Discount factor @ 6.5% for 2 years, 6% thereafter |
| 2018 | Discount factor @ 6% | Discount factor @ 6% | Discount factor @ 6.5% for 1 year, 6% thereafter |
Consequently, when used in a projection, this valuation assumption of duration-based rates has a built-in gain or loss (due to change in actuarial assumptions) because the 10 year duration does not decrease from one valuation date to the next, that is, the interest rate assumed to apply for a particular plan year, such as 2017 in our example, is not the same for all forecast valuation dates.
The transfer value liability mortality basis is specified separately from the funding valuation mortality basis indicated under the Decrements topic of these Valuation Assumptions; select the Mortality rates from the list of mortality rate reference tables in the current Project, or click the 
button to access the library to create and modify mortality rate tables. To base the transfer value liability on the same mortality table(s) as specified for ongoing funding results, select the “<use funding valuation assumptions>” option. You may Assume zero pre-commencement mortality for inactives and actives after decrement. By checking this box ProVal will use 0 mortality rates prior to benefit commencement for inactives and actives after decrement. Note, the only mortality table types permitted with this option are age tables or age by pre/post-commencement tables.