QUESTION: What is the difference between the Total Salary and Valuation Salary Output Variables?

ANSWER:  Total Salary is the total of values contained in the Current Salary field for all active members (i.e., records whose status field code is mapped to ProVal’s active status) who are included in the liabilities, that is, who are not excluded by the Selection Expression (accessed by means of the Census Data button) of the Valuation(s) or Core Projection(s), or (if you are viewing Valuation Set or forecast Output Variable values) the underlying Valuation(s) or Core Projection(s).

Valuation Salary, used to determine the Present Value of Future Salaries under a “spread gain” liability method, is a subset of the Total Salary. It excludes salaries for members who, as of the valuation date,

• are at or over the age at which retirement rates first become 1 or

• have not yet met the eligibility conditions to be included in the plan, as determined by the inclusion parameters of the Other Valuation Parameters topic of Valuation Assumptions.

In the U.S. qualified and U.S. public pension modes of operation, Valuation Salary may be capped or uncapped by the IRC Section 401(a)(17) compensation limit, based on the setting of a check box in funding Valuation Assumptions. In an accounting run, however, Valuation Salary is not capped (note that there is no check box in Accounting Assumptions that corresponds to the compensation limit check box of funding Valuation Assumptions).

Note that if both funding and accounting Valuations and/or Core Projections are run, results displayed for Total Salary and Valuation Salary are obtained from the funding run. Thus if Valuation Salary is capped in the funding assumptions at the IRC Section 401(a)(17) compensation limit, to see the its value from the accounting run, you must run another Valuation, referencing only accounting assumptions.

Another element of difference between the values of Valuation Salary and Total Salary may arise if the Timing for PVFS, PVFL, valuation salary and number parameter of the funding Valuation Assumptions is not beginning-of-year and adjustments are applied. (See Liability Methods for details.)

For additional information, see Active Headcount vs. Valuation Number.