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Deferreds Basis: RetCash

Cash Parameter Set

Cash Parameter Set is a Scheme Global parameter which groups the Retirement Cash Commutation variables. This can be created by using either the Create Globals function or using the Add/Edit Retirement Cash button. Once created, these parameters can be edited without going back into the Basis similar to other global parameter sets.

Benefit Basis

Benefit Basis can be Neutral/Nil, Multiple of Pension or Percentage of Pension.

Cash Indicator

Select from the drop-down list how to value cash benefits. The options are:

  • Commutation
  • On top
  • None

Note: This field is only available to some users.

Cash Multiple

Cash Percentage

The commuted cash can be calculated either as a Multiple or a Percentage of the PUP.

If an entry is made in the Multiple field, the commuted cash will be calculated as:

Multiple × PUP revalued to retirement × Early Retirement Reduction Factor (if applicable).

The Multiple can either be a fixed Multiple for all members or a Member Specific Multiple. To use a fixed Multiple enter the value i.e. for 4 times the PUP enter 4. To use a Member Specific Multiple, select from the drop-down list the data item containing the appropriate value. To value commutation of 4 times the PUP ensure the data item contains the value 4.

To value a Percentage, ensure the entry in the Multiple field is blank. The commuted cash can be calculated as:

Percentage × PUP revalued to retirement × Commutation Factor × Early Retirement Reduction Factor (if applicable).

The Percentage can either be a fixed Percentage for all members or a Member Specific Percentage. To use a fixed Percentage enter the value ie for 25% enter 25. To use a Member Specific Percentage, select from the drop-down list the data item containing the appropriate value. To value commutation of 25% of the PUP ensure the data item contains the value 25.

General Commutation is restricted to avoid commuting the GMP. There is no allowance for post-retirement increases in calculating this restriction.

Cash Data Item SuperVal does not have the functionality to value an explicit Cash Commuted Data item. However, as a work around users can enter the Member Specific Commuted Cash as a data item in the Cap Cash Amount below. They should then enter either a Percentage or a Multiple here. The Percentage or the Multiple entered should be sufficiently large so that the data item entered in the Cap Cash Amount will bite for all members.

Separate A-Day Cash Factors for each Pension Increase

This field indicates if separate A Day cash factors are to be calculated for each pension increase or whether a single factor applies to the entire pension.

If a User opts for the average factor approach which means the field is left unchecked, then the User needs to select whether the average factor will be applied Pro Rata or Priority.

Treat Independent PUP Cash as Cash on Top

Users sometimes value Cash on Top in the Ind Slices and Ind PUPs giving data items the same payment start and end age. If the intention is to include this Cash on Top amount in the A Day max calculation, then this box should be checked.

If this box is unchecked the system will still value cash amounts in the Ind Slices and Ind PUPs but the A Day maximum will not be reduced to allow for this Cash on Top (if the basis has Percentage of A Day Cash commutation specified).

Commutation Priority

This field is used to determine the order in which pension will be commuted for cash. Select from the drop-down list which of the options to use. The options are:

  • After Split (actives only)
  • Before Split (actives only)
  • Priority
  • Pro Rata

If After Split or Before Split is used then the pension is commuted by reference to the Latest Finish Date specified on the Offset Slice.

Typically an active member will have a service timeline as shown in the following diagram:

If After Split is selected then the pension accrued after the End of the Offset Slice would be commuted first. Within each period pension may increase at different rates and are commuted in the following order:

  • Special
  • Main
  • Pension Increase 3
  • Pension Increase 4

If Before Split is selected then the pension accrued before End of the Offset Slice would be commuted first. Within each period pension may increase at different rates and are commuted in the following order:

  • Special
  • Main
  • Pension Increase 3
  • Pension Increase 4

If Priority is selected then the cash is commuted according to the pension increase rate applied on the Slices or PUP Tab. Pensions are commuted in the following order:

  • Special
  • Main
  • Pension Increase 3
  • Pension Increase 4

If Pro Rata is selected, then pension is commuted in proportion to the pension amounts, irrespective of the pension increase rate.

Male Commutation Tables Parameter Set

Female Commutation Tables Parameter Set

Commutation Tables Parameter Set is a Scheme Global parameter which groups the Male or Female Commutation table variables. This can be created by using either the Create Globals function or using the Add/Edit Commutation Table button.

Once created, these parameters can be edited without going back into the Basis similar to other global parameter sets.

Calculate Male Commutation Factors based on Valuation Basis

Calculate Female Commutation Factors based on Valuation Basis

SuperVal will calculate commutation factors applicable to each individual member using the valuation basis and the all relevant Basis Parameters (Guarantee Period, Post Retirement Mortality, Post Retirement Interest rate and Pension Increases).

Male % of Valuation Basis Factor

Female % of Valuation Basis Factor

Users can define the % of Valuation Basis Factor they want to apply to the Scheme. To have this field visible the above field Calculate Male/Female Commutation Factors based on Valuation Basis needs to be ticked. The Valuation Factors produced by SuperVal can be seen in individual VARPRINTs.

Male Main

Male Special

Male PenInc3

Male PenInc4

Female Main

Female Special

Female PenInc3

Female PenInc4

Double click to select the rate table containing the Commutation Factors ie the amount of cash received for each pound per annum of pension commuted. Please note that SuperVal assumes exits prior to NRA occur half-way through the year i.e. 0.5 years, 1.5 years etc after the valuation date. Exits at NRA occur at the beginning of the year. This should be reflected in the Commutation Factors entered into the table ie for ages prior to NRA the factor in the table should be the factor that would apply at the point of exit.

For example, a factor of 9 at age 65 means that for every pound surrendered in pension at age 65 the member would receive £9 in cash.

Separate tables can be specified for males and females and for each of the different pension increase rates (Main, Special, Pension Increase 3 and Pension Increase 4) being used.

Even if cash is payable on top of pension benefits, cash commutation factors are still required for application of IR Maximum rules.

Decr Help

Rate tables can be selected by any of the following methods:

  • Right-click on the field for a list of appropriate Rate Tables. For a field that will accept more than one type of Rate Table (e.g. Miscellaneous Tables), the list will be restricted to the current Table Type specified in the field – if you wish to see all allowable Rate Tables, delete the Table Type from the field before clicking; or
  • Double Clicking on the field will produce the Rate Tables form where Rate Tables can be viewed (numerically and graphically) and Rate Tables can be added or edited. A Rate Table can be selected by pressing the Select button or double clicking on the Rate Table description in the tree; or
  • the list of allowable Rate Tables can be scrolled through by pressing the < or > keys. The description of the Rate Table to the right of the field will change as each new Table is selected.

Linearly Interpolate Male Commutation Tables for mid-point Exit values

Linearly Interpolate Female Commutation Tables for mid-point Exit values

When checked, the system will linearly interpolate factors for mid year exits such as early retirements and deaths. For Normal Retirements, the system will apply no interpolation. If unchecked, the system will use the factor specified at the age nearest rounded down for mid year exits as previous versions have done.

Adjust Male Commutation Tables by the change in member's expectation of life

Adjust Female Commutation Tables by the change in member's expectation of life

Future mortality-improvement assumptions underlying the Technical Provisions can be applied to the tabulated commutation factors in force at the valuation date, to calculate revised commutation factors at the date of exit.

Cash Cap Amount

SuperVal allows the user to enter a Cap on the cash benefit payable. Select from the drop-down list the appropriate data item. If the cash benefit is not restricted leave blank.

SuperVal will value the lower of the Cash Cap Amount and the cash benefits specified on the Ret Cash Tab.

To value the Cash Cap Amount as the cash benefit ensure the cash benefits described on the Ret Cash Tab exceed the data item for all members.

% of Cash Cap Amount

The Cash Cap Amount data item can be reduced or increased by entering a percentage of the data item to value. Enter 100 to value 100% of the data item as the Cash Cap Amount.

Revaluation Rate Override

The user has the option to enter an override for the rate at which the Cash Cap Amount will increase in deferment.

Select from the drop-down list the Global Financial Parameter that contains the rate applicable. Once selected, the current value is shown to the right of this field.

To add a new Global Financial Parameter use the Edit Scheme Financials button at the bottom of this Tab.

If you do not wish to use this option then leave blank.

Complete Years Only Override

The user has the option to enter an override for the Count Complete Years entered on the Financial Tab.

Exits before NRA such as early retirement and death in deferment are assumed to occur half way through the year i.e. 0.5, 1.5, 2.5 years after the valuation date. By selecting Yes these benefits will receive revaluations for the number of complete years only i.e. 0, 1, 2. By selecting No these benefits will receive an additional half-year of revaluations i.e. 0.5, 1.5, 2.5.

If you do not wish to use this option then leave blank.

Exit Rounding Override

The user has the option to enter an override for the NRA Exits Rounding entered on the Financial Tab.

Select from the drop-down list how the rounding for exits at NRA Override on the Cash Cap should be calculated. The revaluation of the Cash Cap to Normal Retirement Age will be based on the exact duration between Valuation Date and Normal Retirement Date, rounded according to the parameter entered. The options are:

  • Exact Days
  • Months Rounded Down
  • Nearest Months
  • Months Rounded Up
  • Years Rounded Down
  • Nearest Years
  • Years Rounded Up
  • Complete Tax Years

The discounting of the benefit will be based on years nearest.

If you do not wish to use this option then leave blank.

ERF Indicator

Select from the drop-down list which Early Retirement Reduction Factors to apply to the Cash Cap. The options are as follows:

  • None
  • ERF1
  • ERF2

Adjustment Factor

A negative or positive loading can be applied to the Cash Cap.

If no adjustment is required enter 1. If 0 is entered the liability for the Cash Cap will be zero.

This field can be used to allow for any contingencies, such as children’s pensions, which are not valued by SuperVal.

Add/Edit Retirement Cash

Add or Edit any Retirement Factor parameter sets

Add/Edit Commutation Tables

Add or Edit any Commutation Tables parameter sets.

Edit Scheme Financials

Clicking the Edit Scheme Financials button takes you to the Scheme Financials menu.

Here you will be able to see a list of all the Financials that are currently defined. Double-click on the tree to see an expanded list of all financial assumptions that are defined.

Click the Add/Edit Financials to change the value of one of the assumptions.

SaveAs

Click the Save As button to save with a new file name.

Save

Clicking on the Save button allows you to save the entries.

Quit

Clicking on the Quit button allows you to exit without saving any of your changes.

In some of the screens you will be asked to confirm if you want to exit Ignoring all changes. If you click Yes, the file will be closed without saving any changes. If you click No you will be returned to your original screen.

From the Browser, the Quit button will take you to a graphical display of the results.