PVSLPBGC calculates the present value of a single life annuity
based on assumptions for interest and the values for the following parameters:
·
MortalityTable =1984 Unisex Pension Mortality = “UP84”.
·
Frequency = 12 (monthly)
·
COLA = 0 (no COLA)
·
CalculationMethod = 0 (interpolation on whole ages)
·
AnnTiming = 0 (beginning of period)
PBGC's benefit payment
regulation (CFR Part 4022) provides that when PBGC trustees a plan, if the
value of a participant's benefit is less than $5,000, PBGC will generally pay
that amount in one lump sum in lieu of a monthly annuity. Prior to 2021, PBGC
used an immediate and deferred interest rate structure for this purpose.
Starting in 2021, PBGC uses IRS 417(e)(3) interest rates for this purpose. More
information is here https://www.pbgc.gov/prac/interest/vls
Syntax
PVSLPBGC(CurrentAge, CommencementAge, ImmediateRate,
DeferredRate1, DeferredRate2, DeferredRate3, [YearsCertain], [NoPreRetMort], [StopAge])
|
Parameter Name |
Description |
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|
CurrentAge |
Current age of the annuitant (i.e. the
age at the valuation date). May be provided as an integer, or as a fractional
amount (e.g. years & months). |
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|
CommencementAge |
Age of primary annuitant 𝑥 at benefit commencement. ·
If CommencementAge >
CurrentAge then it will be valued as a deferred annuity. ·
If CommencementAge
is missing or zero, then CommencementAge is assumed to be = CurrentAge
and it will be valued as an immediate annuity |
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|
ImmediateRate |
The interest rate to discount future
payments during the immediate period, i.e. to discount from
the payment date to the commencement date. Deferred
rates are using to discount from the commencement date to the valuation date.
Must
be a single
number. ·
Note:
A value that is greater than 25% (i.e. 0.25) will be divided by 100; e.g.
if you enter 2.75 it will be treated as .0275 or 2.75%. |
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|
DeferredRate1 |
Discount
rate during the first 7 years of the deferral period. |
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|
DeferredRate2 |
Discount
rate during the next 8 years of the deferral period. |
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|
DeferredRate3 |
Discount
rate during the remainder of the deferral period. |
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|
YearsCertain |
Number of years guaranteed payments. May
be an integer, or a factional amount (e.g. years & months). |
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|
NoPreRetMort |
The defines the application of
pre-retirement mortality for a deferred annuity.
|
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|
StopAge |
Age when the annuity benefit
stops -- no payment at this age. |
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