The Accrued Benefit topic is a part of career average and cash balance accrual definitions. In the universal pension mode, if the with indexation box is checked for a career average accrual format, this topic is entitled “Accrued Benefit & Initial Indexation”.

The accumulation of basis and rates (with interest, for cash balance definitions) defines the growth of the accrued benefit (if the “eec” contingency is selected for the Benefit Definition, growth of the accumulated employee contributions) after the valuation date, but the accrued benefit as of the valuation date (or as of the specified allocation date in German mode) must be defined under this topic.

The Database field option may be applied if the accrued benefit exists on the database. The database field should contain the accrued benefit value as of the valuation date (or specified As of date in German mode, discussed below) for career average components; for cash balance definitions, this field should contain the account balance with interest as of the valuation date (or specified As of date in German mode).

For the development of present value of benefits at entry, ProVal will reconstruct a sequence of accrued benefits from the benefit service start date to the valuation date (or to the specified As of date), following the pattern of the specified rates and accrual basis such that the component value grows to the value found on the database. That is, ProVal will use the parameter settings of the Basis Formula and Accrual Rates topics to calculate values of the accrued benefit at each decrement date prior to the valuation date (or specified As of date); then these values are multiplied by the ratio of the database field value to the accrued benefit value ProVal produces as of the valuation date (or specified As of date).

In the universal mode, if the with indexation box is checked for career average components under the Accrual format parameter, the Apply initial indexation box appears. (Indexation typically is used to code career average plans in the Netherlands.) Check this box to apply indexation to the value of the accrued benefit contained in the selected database field. If the box is checked, indexation for the first valuation year will be applied before any subsequent calculations. (If the box is unchecked, indexation will not be applied.)

The Expected value option should be used whenever the accrued benefit is not found on the database or if you wish ProVal to determine the accrued benefit according to the Basis Formula and Accrual Rates topics. ProVal will generate a sequence of expected accrued benefit values for decrements occurring from the date of hire through the valuation date.

In some cases the accrued benefit should have a value of Zero at the valuation date (or specified As of date, in German mode). This is often appropriate when values of several Benefit Formula Components will be added together. In this situation, selecting one of the other options might result in double-counting some or all of the accrued benefit.

In German mode, when the allocation date differs from the valuation date, the accrued benefit is treated as being as of the allocation date most recently preceding the valuation date. If the Expected Value option has not been selected for the accrued benefit Amount, the As of parameter is accessible. When the allocation date falls on anniversaries of the valuation date (e.g., both the allocation date and the valuation date are Dec 31), the As of parameter allows you to specify whether the effective date of the accrued benefit is As of the Allocation date preceding valuation date (i.e., one year prior to the valuation date – except that if the date of funding is after the valuation date, the accrued benefit will be as of the valuation date) or Allocation date on valuation date. If Allocation date preceding valuation date is selected, then the accrual for the year preceding the valuation date will be added to the user-specified accrued benefit to determine the accrued benefit as of the valuation date.