QUESTION: My plan provides that if retirement is postponed past the normal retirement date, the pension amount will be the greater of (1) the accrued benefit as of normal retirement date with an actuarial increase and (2) the benefit accrued as of the delayed (or postponed) retirement date. How can I code this?

ANSWER:  Starting with ProVal version 3.15, you can do that using a benefit formula component of type late retirement. The following examples illustrate how to properly use this feature:

Example 1: The benefit formula in your benefit definition is "0.5 * ERF * Accrued", where "ERF" and "Accrued" are benefit formula components. You would like "Accrued" to be adjusted for late retirement. Create a component of type late retirement and call it something like "Accrued_LR". Set its Benefit formula component parameter to the existing "Accrued" component. Specify the type of annuity used in calculating the late retirement factors (usually, "Life annuity") and the normal retirement age. After creating this late retirement component, change your benefit formula from "0.5 * ERF * Accrued" to "0.5 * ERF * Accrued_LR". Specify the interest and mortality used in calculating the late retirement factors for "Accrued_LR" in the Conversion Factors topic of the valuation and projection assumptions. 

Example 2: The benefit formula in your benefit definition is "0.5 * ERF * (Accrued1 + Accrued2)", where "ERF", "Accrued1" and "Accrued2" are benefit formula components. You would like "Accrued1 + Accrued2" to be adjusted for late retirement. First, create a component of type subformula, call it something like "AccruedTotal" and set its formula to "Accrued1 + Accrued2". Next, create a component of type late retirement and call it something like "AccruedTotal_LR". Set its Benefit formula component parameter to the "AccruedTotal" component. Specify the type of annuity used in calculating the late retirement factors (usually, "Life annuity") and the normal retirement age. After creating this late retirement component, change your benefit formula from "0.5 * ERF * (Accrued1 + Accrued2)" to "0.5 * ERF * AccruedTotal_LR". Specify the interest and mortality used in calculating the late retirement factors for "AccruedTotal_LR" in the Conversion Factors topic of the valuation and projection assumptions.

Example 3: The benefit formula in your benefit definition is "0.5 * (ERF1 * Accrued1 + ERF2 * Accrued2)", where "ERF1", "ERF2", "Accrued1" and "Accrued2" are benefit formula components. You would like "Accrued1" and "Accrued2" to be adjusted for late retirement using different actuarial equivalence. To do that, create two benefit formula components of type late retirement and call them something like "Accrued1_LR" and "Accrued2_LR", respectively. Set their Benefit formula component parameter to "Accrued1" and "Accrued2", respectively. Specify the type of annuity used in calculating the late retirement factors (usually, "Life annuity") and the normal retirement age. After creating these late retirement components, change your benefit formula from "0.5 * (ERF1 * Accrued1 + ERF2 * Accrued2)" to "0.5 * (ERF1 * Accrued1_LR + ERF2 * Accrued2_LR)". Specify the interest and mortality used in calculating the late retirement factors for "Accrued1_LR" and "Accrued2_LR" in the Conversion Factors topic of the valuation and projection assumptions.

Note on attribution: ProVal compares the accrued benefit at the late retirement decrement age to the actuarially increased normal retirement benefit separately for each cost method and basis, after the appropriate attribution has been applied. This means that it is possible for the one to "win" on PVB basis and the other to win on PUC or UC basis, for the same benefit and decrement age. This is consistent with how subformulas work in ProVal. If you would like this determination to be done only on PVB basis, please consider using the #NoAttrib operator. For example, you can change the benefit formula in Example 1 above from:

0.5 * ERF * Accrued_LR

to

0.5 * ERF * (#IF ((#NoAttrib Accrued_LR) = (#NoAttrib Accrued)) #THEN Accrued #ELSE Accrued_LR #ENDIF) 

This way, if the accrued benefit won at a given decrement age on PVB basis, no late retirement adjustment will be applied for that decrement age on any other basis, such as PUC or UC.