Double pro-ration

[tymesup]

A plan provides a projected benefit of X% of comp, reduced for service less than 35. So far, so good. The accrued benefit is then defined as the projected benefit multiplied by service to date divided by the greater of service at NRD or 35.

Is double pro-ration like this as wacky as it seems?

[Andy the Actuary]

This has an odor about it. Assuming NRA=65, and employee hired at 58 earns a normal retirement benefit of 7/35 = 20%. Your formula would have an accrual pattern of 1/35, 2/35, 3/35, 4/35, 5/35, 6/35, and finally 7/35 of 20% which would then be overridden by 20%. Sounds like a "scrivener's" error and "the greater of service at NRD or 35" should simply be "service at NRD." If not, you've got a backloading problem.

Happy holidays,

andy T.A.