Benefits

At Retirement

The basic version of the 2006 Benefits program calculates the benefits at a current BCE date with no projection of fund values. It used for quoting benefits of proposed BCEs and calculating benefits at actual BCEs.

The program calculates the lump sum and unsecured pension fund from a specified amount of fund to vest.

It checks the ‘Pre Commencement Pension’ field on the ‘Members, 2006 Transition Data’ screen and if there is an amount present, then it checks to see whether there is a date for the ‘deemed BCE’ stored on that same screen. If there is not, it calculates the amount of the deemed BCE (on the same day but immediately before the first actual/proposed BCE).

When the results have been calculated, the details of the BCEs can be stored. The program will store both the lump sum BCE and the unsecured pension fund BCE at the same time. If a deemed BCE has also been calculated then that will be stored as well.

It also updates the ‘Member, 2006 Transition Data’ screen with the ‘Date of the Deemed BCE’.

Expert Version

The expert version of the program includes projections of future benefits and many other features:

Near Retirement

The Retirement Date is used as the reference date because after retirement all pension limit recalculations take place on that date. Those years are extended backwards from the retirement date with the initial period being a part year to the next pre-anniversary of the reference date.

For example, if a person asks, in November 2005, for a projection of benefits based on a retirement date of 30^th April 2007, then the first period is from November 2005 until 30^th April 2006. After that there is one complete year before retirement. Each test for annual pension income takes place on anniversaries of 30^th April. At age 75 the process should change but for simplicity the program still works on the retirement date (30^th April) so the age 75 change takes place on the next anniversary after the member has already reached age 75.

However, if the member would be the same age (in years) on the base date as on the next anniversary of the reference date then the initial period is longer than 12 months. For example, this applies to a member born on 25/01/1946 and who on 01/11/2005 requested a projection of benefits starting on 15/12/2006. On the next anniversary of the retirement date (15/12/2005) the age would be 60 – the same as the age on the base date. The initial period would then be from 01/11/2005 to 15/12/2006.

The dates for the start of each period are exported to Excel.

Fund Protection

Although a member can have both enhanced protection and primary protection, only one of the 2 forms of protections can be selected for the projections – the calculations have to be based on one method or the other. If a member has both, then the program will default to ‘Enhanced Protection’.

If a member has Primary Protection and a protected lump sum then the lump sum is not restricted to 25% of the amount being vested at each BCE. The ‘lump sum %’ can be set at a percentage higher than 25% e.g. if the lump sum is set at 90% then the lump sum will be calculated as 90% of the amount vested at each BCE until VULSR (the uncrystallised lump sum at April 2006, revalued with lifetime allowance increases) is used up.