QUESTION#1: My plan offers a minimum benefit to participants as of 12/31/89 with points (age + service) in excess of 55 at that date. The benefit is: 0.3 % of final average earnings times points over 55, where service is limited to 25 years. Service is measured from hire date. Final average earnings are the highest consecutive 3 year average out of the last 5 years. How can I code this benefit?

ANSWER: Code two benefit formula components (accrual definition type): one that is basis only, for benefits earned up to 12/31/89; and one that is final average, for benefits earned on or after 12/31/89.

The accrual basis of the Basis Only accrual definition might look like:

ELIG * .003 * (3 #FAS 5) * [POINTS89 #zminus 55],

which contains two Accrual Basis Components of the database field type:

ELIG: eligibility flag, defined as:

{[(12/31/89 #YEARDIF DOB) + (12/31/89 #YEARDIF DOH)] > 55} #AND

(DOP <= 12/31/89), where

DOB is the database field containing birth date,

DOH is the database field containing hire date, and

DOP is the database field containing participation date.

POINTS89: points, defined as:

(12/31/89 #YEARDIF DOB) + [25 #MIN (12/31/89 #YEARDIF DOH)].

After choosing the type, choose "database expression". Alternatively, if either of ELIG or POINTS89 is carried on the database for another purpose, choose "database field" for that component.

The accrual basis of the final average accrual definition would be:

ELIG * (3 #FAS 5),

and the benefit service field on the rates screen would be DOH, with zero rates until 12/31/89 and new rates as of 12/31/89. As an accrual over points can be considered an accrual over service at double the stated rate (i.e., ".003 times points" is the same as ".006 times service"), the new rates can be coded as:

.006 for up to 25 years of service and .003 thereafter.

NOTE: With this coding, if attribution of the minimum benefit under the projected unit credit or unit credit cost method is by accrual rate proration (see Attribution ), then the minimum benefit earned through 12/31/89 will be attributed fully to accrued liability. The additional minimum benefit earned between 1/1/90 and date of decrement will be attributed as it accrues.

QUESTION#2: Minimum benefit accruals for all plan participants are .5% of final average earnings times points (age + service) up to 45, plus 1.5% of final average earnings times points over 45. How can I code this benefit?

ANSWER: This formula may be rearranged as ".5% times all points plus 1% times points over 45". Also, as noted in Question #1, an accrual over points can be considered an accrual over service at double the stated rate.

If service and final average earnings are as defined in Question#1, then code two accrual definition benefit formula components of the final average type: one for the benefit earned for all points, and one for the benefit earned for points over 45.

The accrual basis of both final average accrual definitions would be 3 #FAS 5.

On the rates screen of the component for the benefit earned for all points, code the benefit service field as DOH and the rates as constant, .01 for all years of service.

The rates for the other component are .02 for all years of "service", but "service" excludes service before points equal 45. Use an Expression Set to compute age and service on the valuation date, according to your plan’s definition of age and service to compute points, and then "count back" to define the date when age plus service equals 45. (See the Frequently Asked Question about Calculating the Date Points Are Attained.) Store this date in a database field and select it as the benefit service field.