Datair Question

[Andy the Actuary]

An actuarial report prepared using the Datair system shows a TNC for a DB plan that has been frozen since the 1990s. Why would this be? Would they be measuring the actuarial increase to late retirees as a change in accrued benefits? This would make some sense, though the assumption page does not indicate there is a retirement delay for those actives over the normal retirement age on the valuation date. I.e., the assumption would be they retire immediately.

[david rigby]

Since you say "TNC", I assume this is UC method. Just asking.

Could a TH minimum be the cause?

Could there be some unusual death benefit as cause?

[flosfur]

An actuarial report prepared using the Datair system shows a TNC for a DB plan that has been frozen since the 1990s. Why would this be? Would they be measuring the actuarial increase to late retirees as a change in accrued benefits? This would make some sense, though the assumption page does not indicate there is a retirement delay for those actives over the normal retirement age on the valuation date. I.e., the assumption would be they retire immediately.

The plan specs or the assumption page would not tell you if there are delayed retirement ages for one or more employees. You will have to determine that by calculating the NRD of an individual and see if that was in the past or is in the future.

In any event, an actuarial increase in the accrued benefit should not result in a TNC because there is no "additional accrual". An actuarial increase is not an additional accrual - it is a quid pro quo for delaying payments! If there is a TNC, then it is a coding problem. For a person past NRA, the prior year accrued in the employee data screens should be set to the Actuarial Equivalent of the prior year accrued for the RA used in the current valuation. If that is done, then there will no TNC.

As to the possibility of TH accruals, for a "frozen plan" there should not be any additional TH accruals after EGTRRA (unless a plan decided not to adopt that rule).

[Andy the Actuary]

Thank you all. My reading of the frozen plan rules is that after 12/31/2001, no further service is granted for top-heavy purposes. And, the determination of average compensation disregards these years as well. Ergo, not TH benefits. I will buy coding error.

[david rigby]

OK. When referring to TH, my intent was to refer to possible coding error, not plan provision.

[Andy the Actuary]

OK. When referring to TH, my intent was to refer to possible coding error, not plan provision.

I am dense and apologize. This upside down hanging is starting to get to me.