QUESTION:  I have a cash balance plan where the interest crediting rate valuation assumption is updated every year based on the 30-year Government yield. How can I reflect the future changes to this valuation assumption in my forecast?

ANSWER:  You can use the valuation benchmark sensitivities found in the Valuation Assumption Sensitivities topic of Projection Assumptions to capture the future changes in your valuation increase rate assumption. In this situation, the low, medium, and high valuation benchmark anchor points will be set based on a reasonable range for the 30-Year Government yield (e.g. low=0%, medium=5%, high=10%). If you are running a stochastic forecast, you want this range to be wide enough to cover the vast majority of your simulated yields. Then, in the Benefit Formula Components topic, enter the appropriate sensitivity fraction for your cash balance components. A sensitivity fraction of 1 means your valuation assumption will increase (or decrease) 1 basis point for every basis point increase (or decrease) in the valuation benchmark. 

Let's say the interest crediting rate valuation assumption as of the valuation date is 5%, and you are running a deterministic forecast with the anchor points from above (low=0%, medium=5%, high=10%) and sensitivity fraction of 1. If the valuation benchmark specified in your deterministic assumptions is 6.25% in all forecast years, ProVal will use the core projection results at the 5% and 10% anchor points to calculate a liability at the assumed 6.25% interest crediting rate assumption. 

Note that you will need to utilize the alternate benchmark in your projection assumptions if you want the experience interest crediting rate to move with the valuation assumption in your forecast.