QUESTION: Can I value two permanent plan amendments in a Core Projection?

ANSWER: Yes, though technically the solution uses multiple "unit benefit update" amendments instead of "permanent change" amendments. (For a more typical use of "unit benefit update" amendments, see Projecting multiple plan amendments, example 1). To illustrate the solution, consider a 1/1/1998 Core Projection with plan changes in 1999 and 2000. To value the plan changes:

1. Set up 6 Benefit Formula Components of the "constant" type. Check the box to "apply increase rates" and set their values to:

FACTOR1998_A = 1.0000

FACTOR1999_A = 0.0001 (1/10,000 – to approximate zero)

FACTOR2000_A = 0.0001 (1/10,000 – to approximate zero)

FACTOR1998_B= 1.0000

FACTOR1999_B = 0.0001 (1/10,000 – to approximate zero)

FACTOR2000_B = 0.0001 (1/10,000 – to approximate zero)

2. Set up two similar Benefit Definitions. The respective benefit formulas will include expressions for the 1998, 1999, and 2000 benefits, multiplied by the factors above. For example:

Benefit A:

(BFT1998 * FACTOR1998_A) + (BFT1999 * FACTOR1999_A) + (BFT2000 * FACTOR2000_A)

Benefit B:

(BFT1998 * FACTOR1998_B) + (BFT1999 * FACTOR1999_B) + (BFT2000 * FACTOR2000_B)

3. In your Plan Definition, include Benefit A but not Benefit B.

4. In Valuation Assumptions, set the increase rates for the "A" and "B" factors to zero.

5. In Projection Assumptions, set the increase rates for the "B" factors as follows:

	From	To	Rate	Value of factor
FACTOR1998_B	-	1997	0	1 in 1998
	1998	1998	-1	0 in 1999+
	1999	-	0
FACTOR1999_B	-	1997	0	~0 in 1998
	1998	1998	9,999	1 in 1999
	1999	1999	-1	0 in 2000+
	2000	-	0
FACTOR2000_B	-	1998	0	~0 in 1999
	1998	1999	9,999	1 in 2000+
	2000	-	0

Set the increase rates for the "A" factors in the same way, but add 1 to the years in the "From" and "To" columns above. Why? In the next step, the "unit benefit update" type will require Benefit A to represent the prior year’s formula at each year in the future.

6. In Projection Assumptions, use the Plan Amendments feature to amend Benefit A to Benefit B in years 1999 and 2000 as a "unit benefit update".

7. Run your Core Projection.