Check the Perform triennial valuations box to perform a complete valuation in the initial valuation year and every third year after a full valuation. Partial valuations will be performed for the interim years if permissible based on the regulations under the Applicable Provincial Law. The requirements are checked at each valuation date, so a plan may be eligible for partial valuations for the first part of a forecast but become ineligible at a future valuation date. If a plan does not satisfy the requirements permitting a partial valuation, a complete annual valuation will be performed. Complete valuations will always be performed in the following cases:

• Valuation Set

• Initial year of a forecast

• Any year with a plan amendment

• The year following a year in which a complete valuation was performed due to not meeting the eligibility requirements for a partial valuation

• Years with an assumption change if the methodology for estimating the employer normal cost for the interim years is increase with interest

In a partial valuation, the normal cost rate and amortization payments are based upon the results of the last complete annual valuation. Thus, the normal cost is defined as the prior normal cost rate multiplied by the current total salary, and all amortization amounts remain level with the prior year except that they will increase with payroll if so parameterized, and fully amortized bases will drop off. For details regarding the criteria that ProVal checks to determine if a partial valuation is permitted, see the Technical Reference article entitled “Triennial valuations ”.

If triennial valuations are selected, enter the required parameters under the Params button including a method for estimating the normal cost in the partial valuation years. If triennial valuations are selected and a Valuation Set is run, ProVal will produce an exhibit summarizing the minimum required contribution for the valuation year plus the estimated contributions for the two years following the valuation year. The following parameters must be entered:

Select a methodology for estimating the employer normal cost for the interim years;

• Percentage of valuation pay or total pay - ProVal will calculate the normal cost rate in the complete valuation year as employer normal cost / pay. This rate will then be applied to the pay for each interim year to determine the employer normal cost.

• Percentage of employee contributions - ProVal will calculate the normal cost rate in the complete valuation year as employer normal cost / employee normal cost. This rate will be applied to the expected employee contributions for each interim year to determine the employer normal cost.​

• Dollar amount per member - ProVal will calculate the normal cost rate in the complete valuation year as the employer normal cost / active participant count. This rate will be applied to the active participant count for each interim year to determine the employer normal cost.

• Increase with interest - ProVal will calculate the employer normal cost for each interim year by rolling forward the employer normal cost from the prior year with interest.

Complete the assumptions for a Valuation Set (note that these assumptions are ignored in a forecast and the actual forecast experience will be used).

• Salary Scale - the rate at which valuation and total pay are expected to increase.​

• Inflation for expenses - the rate at which expenses included in the normal cost are expected to increase.​

• Optionally, override employee contributions for Years 2 and 3 by checking the override box and entering the values.​

• Optionally, override the dollar amount per member (only applicable when the normal cost methodology is dollar amount per member) for Years 2 and 3 by checking the override box and entering the values.​

• Optionally, override the expenses included in the normal cost for Years 2 and 3 by checking the override box and entering the values.

Check the box to share contribution holiday with employees if you wish to reduce employee contributions to 0 when the employer's minimum required contribution is calculated to be 0. Note that this option will affect asset projections and expense calculations. Liability calculations (e.g. refunds of contributions or offsets to gross normal cost) will not be changed based on this option.

Select the desired Contribution Frequency, to indicate whether plan contributions are made annually, quarterly or monthly. Any rounding will be done, and the normal cost may be adjusted with interest, based on this frequency. In addition, payments for amortization bases in the Valuation Set Exhibits will be displayed, if quarterly or monthly, both at this frequency and annualized.

Indicate whether Payments are made at the beginning of period or end of period. If “end of period” is selected, the amortization payments, and possibly the normal cost, will be adjusted with interest to reflect the combination of this timing frequency, the contribution frequency, and the Contribution Policy Normal Cost Methodology parameters. Note that this parameter impacts the contribution calculation but does not control the assumed timing of contributions, with respect to assumed investment return on employer contributions, during a deterministic or stochastic forecast. Assumed contribution timing during a forecast is based on the Contribution Policy Fraction of year from Valuation Date to average date contributions are made parameter.

ProVal’s standard Normal Cost Methodology is to calculate a beginning-of-year normal cost for both the minimum required and maximum tax deductible contributions. However, if you check the Apply interest adjustment for contribution frequency box, ProVal will adjust the beginning-of-year normal cost with interest to reflect employer contribution payments made quarterly or monthly (instead of a single payment at the beginning of the year), as indicated by your selection for the Contribution Frequency parameter (entered under the Minimum Funding Amortization Bases topic). This normal cost value will be used for both the minimum and maximum contribution calculations. If you apply an interest adjustment, the Use b.o.y. normal cost for minimum contribution box becomes accessible, to allow you to apply the interest adjustment only for the maximum contribution and use a beginning-of-year normal cost for the minimum contribution.

Select whether the normal cost adjustment factor for decrements is based on a constant or based on the ratio of total salary to valuation salary. If a constant is selected, enter the constant value which should be multiplied by the calculated normal cost to derive a normal cost reflecting decrements expected to occur during the year.  The constant value will be used in  all years of a forecast.  If ratio of total salary to valuation salary is selected, ProVal will adjust the normal cost each year by the ratio of total salary to valuation salary.  This ratio will be recalculated during each year of a forecast.

For the Solvency amortization rate, you may select to Blend annuity purchase & transfer value interest rates, use the Transfer value interest rate or enter a Specified rate.

If you select the option to Blend annuity purchase & transfer value interest rates, a weighted average interest rate will be developed where the corresponding liability values are used as the weights. The annuity purchase liability used to weight the interest rates will be the total of the immediate and deferred annuity purchase liabilities but only the immediate annuity purchase interest rate will be reflected in the weighted average.

If you select the Transfer value interest rate option, the transfer value interest rate basis is used as the solvency amortization rate, regardless of whether any solvency liability is calculated on the annuity purchase interest rate basis.

If you select either the Blend annuity purchase & transfer value interest rates option or the Transfer value interest rate option, all Valuations (or Core Projections) contained in a Valuation Set (or forecast) referencing this Asset & Funding Policy must base solvency liability on the same discount rate(s).

If you select the Specified rate option, the rate you enter will be used as the amortization rate and the rate(s) used to calculate solvency liability will be ignored when the amortization payment amount is calculated. This rate is used without adjustment as the solvency amortization rate in a Valuation Set and for the initial (baseline) year of a forecast. For future forecast years, a spread is calculated as the difference between the rate you entered and the solvency liability discount rate that ProVal calculated for the baseline year; this spread is then added to the forecasted solvency liability discount rates to produce the solvency amortization rate. Enter the Specified rate as a percentage (e.g., 4, not 0.04, for a 4% amortization rate).

Check the Exempt from Maximum Tax Deductible Contribution limits box to indicate that employer contributions are payable regardless of the amount of plan surplus (if any). Typically, this is applicable for an SMEP plan with negotiated contributions.