FAQ 817: Coding a Postponed Retiree

Problem: How do I code the system to calculate the actuarially increased benefit for a postponed retiree?

Solution: To have the ASC system calculate the actuarially increased benefit and/or their benefit increased for salary and service for postponed retirees, make the following changes in your plan: 1) Change their DATE \ Normal Retirement Date to the day AFTER the valuation date. In subsequent plan years, the system will update their Normal Retirement Date during the Calculations > Update to New Period routine if 'Update NRD for postponed retirees' is selected. 2) The DATE \ 'Date NRA Attained' should remain the date at which they reached the normal retirement age and completed the plan's service/participation requirement 3) Set their DATE \ Participation Status to A so that the system will not recalculate their retirement dates during valuation calculations 4) Make sure the value input in their Benefits \ 'Prior Accrued Benefit' field is correct. 5) Input compensation in the COMP \ 'Current Compensation' and 'Current Annual Compensation Rate' fields 6) Select the method described in the plan's provisions to calculate the increased retirement benefit in the Plan Specifications: General \ Benefits \OTHERBEN \ Postponed Retirement Benefit field. The following options are available: '1 - Actuarial Equivalence' to have the system calculate the actuarial equivalence of the Prior Accrued Benefit '2 - Increased for Salary and Service' to have the system calculate the plan formula benefit increased for salary and service '3 - 1 + 2': Option 1 plus Option 2 '5 - Greater of 1 and 2': Greater of Option 1 or Option 2. This option is the most commonly used by small plans For information on how to code a postponed retiree to be assumed to retire in a future plan year, refer to FAQ 944: http://faq.asc-net.com/CSCarticles/Defined%20Benefit/FAQ944_Coding_a_postponed_retiree_who_receives_added_service_credit.htm