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Actives Basis: RetCOT

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.

Retirement Cash Benefit Basis

A lump sum cash benefit can be paid at retirement either through commutation (ie exchange of pension for cash) or in addition to the pension benefits. Select from the drop-down list the basis of calculating any cash benefit provided. The options are:

  • Neutral or Nil
  • 25% of Pension
  • IR Maximum
  • 2.25 × Pension
  • Accrual × Salary for each year
  • 3 × Pension
  • Multiple of Pension
  • % of Pension

When using the IR Maximum option the user will need to set up the IR Maximum Parameters Rules.

When using the Accrual × Salary for each year, the user will be required to enter the salary, service and accrual rate on which this is based. Note that if using this option, ERF factors will not be applied to the cash on top lump sum. (If you do want ERFs to be applied to cash on top, you could use the Multiple of pension option instead.)

When using the Multiple of Pension, the Multiple can either be fixed for all members or be a member specific amount. To use a fixed Multiple, enter the value. To use a Member Specific Multiple, select from the drop-down list the data item containing the appropriate data.

When using the % of Pension, the Percentage can either be fixed for all members or be a member specific amount. To use a fixed Percentage, enter the value. To use a Member Specific Percentage, select from the drop-down list the data item containing the appropriate data.

When using 25% of Pension or % of Pension, the amount of cash lump sum will be determined by the Commutation Tables specified.

For all of these options you can select whether to Ignore GMP in Split. The Commutation will be restricted to avoid commuting the GMP, however there is no allowance for post-retirement increases in calculating this restriction. In addition, you will be required to specify the Commutation Priority and the Commutation Tables to use.

Finally, where benefits for both Cash On Top of pension and Cash Commutation are specified the Cash Commutation is calculated first. If the Cash On Top formula relates to the amount of pension this will be based on the pension prior to commutation.

Retirement Cash: Accrual Rate

This field is only required if the Cash Calculations are based on Accrual × Salary for each year. Enter the percentage of salary to be used in the calculation of cash for each year of service i.e. for 3/80ths use 0.0375.

When using this option, Early-Retirement Factors will not be applied to the cash-on-top benefit.

Cash Salary

This field is only required if the Cash Calculations are based on Accrual × Salary for each year. Select from the drop-down list the salary to be used in the calculation of cash for each year of service.

When using this option, Early-Retirement Factors will not be applied to the cash-on-top benefit.

Cash Service

This field is only required if the Cash Calculations are based on Accrual × Salary for each year. Select from the drop-down list the service to be used in the calculation of cash for each year of service. The options are:

  • Scheme Membership
  • Company Service

Note that total service from either Date Joined Scheme or Date Joined Company will be used in these calculations.

When using this option, Early-Retirement Factors will not be applied to the cash-on-top benefit.

Commutation Multiple

This field is only required if the Cash Calculations are based on a Multiple of Pension. The Multiple can either be fixed for all members or member specific.

To use a fixed multiple, enter the multiple here. (Using a multiple of 3 is the same as selecting 3 × pension.)

To value a member specific multiple, select from the drop-down list the data item containing the appropriate data.

Percentage of Pension for Cash

This field is only required if the Cash Calculations are based on a % of Pension. The Percentage can either be fixed for all members or a member specific percentage.

To value a fixed percentage for all members, enter the percentage here ie for 25% enter 0.25.

To value a member-specific percentage, select from the drop-down list the data item containing the appropriate data.

Retirement Age Parameter Set

  • RetCOT Male Retirement Factors Parameter Set
  • RetCOT Female Retirement Factors Parameter Set

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

Early-Retirement Factors: Cash on Top

  • RetCOT Male COT ERF1 (Revaluation 1 & 3)
  • RetCOT Male COT ERF1 (Revaluation 2)
  • RetCOT Male COT ERF2 (Revaluation 1 & 3)
  • RetCOT Male COT ERF2 (Revaluation 2)
  • RetCOT Female COT ERF1 (Revaluation 1 & 3)
  • RetCOT Female COT ERF1 (Revaluation 2)
  • RetCOT Female COT ERF2 (Revaluation 1 & 3)
  • RetCOT Female COT ERF2 (Revaluation 2)

This field allows the user to specify a set of early retirement reduction factors that apply to cash-on-top benefits options other than Accrual × Salary for each year. When using Accrual × Salary for each year SuperVal always assumes the Early-Retirement Factors are equal to 1.00. The user can specify 4 different sets of Early-Retirement Factors. These are:

  • ERF1 for use with Revaluation Rates in deferments 1 and 3
  • ERF1 for use with Revaluation Rate 2
  • ERF2 for use with Revaluation Rates in deferment 1 and 3
  • ERF2 for use with Revaluation Rate 2

Users without access to Late Retirement Code

The rate table is typically an FX table and should contain non-zero entries for ages at which members are assumed to retire. Please note that SuperVal assumes exits prior to NRA occur half-way through the year ie 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 early-retirement reduction factor tables used. Therefore, if the reduction is 4% simple per annum, and the NRA is 65, the table should be defined as follows:

Age Rate
65 1.00
64 0.98
63 0.94
62 0.90
Etc.

Benefits of member’s above NRA can be adjusted to reflect late payment by adding a factor in ages above NRA i.e. 1.04 at age 66 for a 4% increase. Please note members above NRA will be assumed to retire at the valuation date.

Where this has been left blank, SuperVal will use the Pension Early-Retirement Factors specified. (To value an unreduced cash payment enter a table with 1.00 at each age.)

Double-click to select from a list of available rate tables.

Users with access to Late Retirement Code

The rate table is typically an FX table and should contain non-zero entries for ages at which members are assumed to retire. If a LRA is specified, SuperVal will only use the table specified here prior to NRA.

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 early-retirement reduction factor tables used. Therefore, if the reduction is 4% simple per annum, and the NRA is 65, the table should be defined as follows:

Age Rate
65 1.00
64 0.98
63 0.94
62 0.90
Etc.

Where a Late Retirement Age has not been specified, members above NRA will be assumed to retire immediately using the ERF specified here. If this has been left blank, SuperVal will use the Pensions ERF specified. (To value an unreduced cash payment enter a table with 1.00 at each age.)

Where a Late Retirement Age has been specified, members above NRA will be assumed to retire in accordance with the ER/LR decrement specified on the Demographic Tab. Please note all retirements after NRA occur at the beginning of the year. Their benefits above NRA will be adjusted using the Cash on Top Late Retirement Factors specified on the Late Retirement Tab. Where this field has been left blank, SuperVal will use the Pension Early/Late Retirement Factors specified. (To value an unreduced cash payment enter a table with 1.00 at each age.)

Double-click to select from a list of available rate tables.

Selecting rate tables

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 Retirement Factors for mid-point Exit values

  • RetCOT Linearly Interpolate Male Retirement Factors for mid-point Exit values
  • RetCOT Linearly Interpolate Female Retirement Factors 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.

Add/Edit Retirement Cash

Add or Edit any Retirement Cash parameter sets

Add/Edit Retirement Factors

Add or Edit any Retirement Factor parameter sets

Save As

Click the Save As button to save with a new parameter description.

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.