late retirement

[Gary]

a frozen plan has NRA of 62 and is a one participant plan.

participant not near 415 limit.

plan provides that for late ret benefit is actuarially increased.

a tpa firm ran a val with retirement deferred to age 65 but did not actuarially increase benefit payable at 65.

my position is that the benefit s/b act increased per plan terms.

any one see justification in not actuarially increasing benefit at late ret for val purposes?

thanks

[SoCalActuary]

I don't see any justification for ignoring 3 years of benefits due.

If the participant is now age 65 and the plan has a suspension of benefits rule, then the participant might have forfeited the benefits.

Otherwise, I don't see it.

[Gary]

just to clarify.

the participant is age 59 and proposed val by tpa firm has assumed ret age of 65 instead of nra 62.

of course i dont see that changing the methods, but just want to be sure to be clear.

thanks

[SoCalActuary]

is the benefit payable at 62 under the formula being adjusted to 65, reflecting the late retirement provisions in the plan?

If not, then the actuary is assuming that the participant will forfeit benefits.

[Hojo]

1) Is this a new TPA and are they aware of the Age 62 NRD or are they doing a quick valuation based on incomplete information?

2) Is this participants actual NRD Age 62 or is it something like 62/5 and their NRD is actually 65?

3) Are you certain that the plan document doesn't already account for late retirement from 62 to 65?

[Gary]

nrd is age 62 and one man plan.

plan does provide for actuarial increases for late ret.

tpa wanted to assume ret age 65 with no increase in frozen AB.

my position is simply that you act increase AB to 65 per plan.

my inquiry here was if anyone had a view or experience of deferring ret to age 65 and not increasing benefit payable actuarially.

i was trying to see if tpa opinion could be supported in any way.

i dont believe benefits can be forfeited accept upon plan termination distribution.

[SoCalActuary]

If the document provides a suspension of benefits notice, and the participant does not take benefits when due, then you can forfeit.

I don't see that fact pattern here, so I think the TPA is just trying to cheat the funding.

[Gary]

right, the doc does not provide suspension of notice and only provides act increase.

[Effen]

I agree with SoCal, that the "TPA's assumptions" are most likely not supportable, however the important thing to note is that the assumptions belong to the actuary, not the TPA.

Have I seen this kind of thing before - sure, there is a lot of crappy work out there.

If you are the signing actuary, and you let other people prepare your valuation reports, you shouldn't complain about the "TPA's assumptions", because the assumptions are yours. Just ask them to change it to something you are comfortable with and re-run it.

[david rigby]

... I think the TPA is just trying to cheat the funding.

I think SoCal is on to something.