The Actuarial Equivalence Provision (Act Equiv Prov) Screen is for defining the specific interest rate and mortality table used in a definition of actuarial equivalence.

Multiple Actuarial Equivalence Provisions are needed if the actuarial equivalence requirements vary through time, with each provision defining the set of conditions for a given time period.

• Period: details the period of time for which this Actuarial Equivalence Provision applies. The Effective Date is the start of the first period these particular parameters are applicable and the Stop Date is the end date. If the provision continues to apply without an end date, check the None box for the Stop Date.
• Interest Rate Type: area to indicate whether the interest rate used in this definition of actuarial equivalence is a fixed rate that never changes over time or whether the rate is variable and fluctuates based upon some index or published rate. Choose either of the following:
• Fixed Rate: select if the interest rate to be used never changes. Enter the fixed rate in the box provided as a decimal. For example, 6% would be indicated entered as 0.06. If necessary, check the Separate pre-payment box and set this rate below.
• Segment Styled Rates: define the 2nd and 3rd Segment Rates here.
• Variable Rate: select if the interest rate to be used will fluctuate over time based upon some published rate. Choose the specific variable index to be used from the drop down box. Options include Treasury/Segment Rates, PBGC Rates, 10-year Treasury Rates, 5-year Treasury Rates, or any of the three PPA Segment rates (i.e., Segment Rate 1, Segment Rate 2, or Segment Rate 3).
• Mortality Tables - Participant and Beneficiary: area to define the Participant and Beneficiary mortality used in this definition of actuarial equivalence. Define each of the following three parameters in both the Participant and Beneficiary sections.
• Base Table: select the base mortality table from the drop down box. The list displays all mortality tables that have been set up in DB Precision. If your table is not on the list, you must first create it using the Mortality icon on the Tables menu. Select "(none)" if you do not wish to use mortality in this definition of actuarial equivalence.
  
  To use 417(e)(3) mortality tables that change over time, choose
  [Floating IRC - 417(e)(3)]. The applicable mortality table will reset annually, with a calendar anniversary equal to the effective date of the provision. 417(e)(3) Mortality Tables can be found here.
  
  For sex-distinct tables, you must indicate whether male or female mortality probabilities should be used by checking the Male or Female button, respectively.
  
  Check the Separate pre-payment mortality box to set another Mortality definition (usually "none") which will apply before payments begin on deferred factors.
• Age Setback(+)/Setforward(-): complete these boxes if an age setback or setforward should be applied to the Base Table. Enter the years and months of adjustment in the Years and Months boxes, respectively. Age setbacks are indicated with positive numbers and age setforwards should be indicated with negative numbers.
• Mortality Projection: these boxes are used to define the projection (if any) you wish to apply to the Base Table.
• Projection Table: select the specific projection table from the drop down box. The list displays all projection tables that have been set up in the system. If you don't see the needed table, you must first create it via the Mortality icon on the Tables menu.
  
  Select "(none)" from the drop down box if you do not wish to project mortality.
• Projection Type and Projection Year: use these boxes to indicate the time period to project mortality. Select one of the following options from the Projection Type drop down box.
• Calculation year: if you wish to project the table dynamically to each calculation year.
• Fixed year: to project the table to a fixed year (e.g., 2025). In this case, you must also enter the year in the Projection Year box.
• Generational: if you wish to project the table using generational mortality.
• Blend Fraction: this fraction between 0 and 1 equals the ratio (if any) of opposite-sex mortality that is to be blended with mortality from the specified gender. For example, if you are blending 50% male and 50% female mortality projection, then enter 0.5 here. Note that to blend mortality, you must create a custom table which includes blending within the mortality probabilities.
• Method for blending 2D Mortality: choose to apply the specified blend fraction to combine the male and female factors either before or after projection of the generational mortality rates.
• Variable Interest Rate Parameters: section for defining the variable interest rate. This area is only applicable if Variable Rate is selected for Interest Rate Type above.
• Rate Levels by Age: select the type of variable rate. Choose from Same for All Ages, PBGC Style Rates, or PPA Segment Rates. For the later, you can check Reflect rate transition rules if applicable. Check the Use mid-year rates box if desired for certain types of variable rates.
• Rate Determination: define the following parameters so that the system can select the specific rate for the index.
• Rate Reset Frequency: indicate the frequency upon which the interest rate is reset. Choose from the following options: Annually, Semi-annually, Quarterly, or Monthly.
• Calendar Anniversary: this is used in combination with the Rate Reset Frequency to define the specific period a variable rate applies and when the interest rate is reset. Enter the Month and Day of the anniversary year that starts the reset frequency.
• Lookback Months: indicate how many months of lookback should be used to determine the variable rate for the period. The system selects the rate for the month that is the indicated number of lookback months prior to the beginning of the particular rate reset period.
• Blend rates with rate from months prior to lookback month: check this box if you wish to blend the lookback rates with another set of rates from a certain number of months prior to the lookback. Enter the number of months the second set of rates precedes the lookback rates in the box provided (Number of Months).
• Flat Adjustment: enter any fixed adjustment to be applied to the interest rate determined using the parameters above. For example, if you always wish to add a flat 1% to the variable rate when determining actuarial equivalence, enter a flat adjustment of .01 here.
• Ratio Adjustment: enter any ratio adjustment to be applied to the interest rate determined using the parameters above. For example, some plans define the interest rate for actuarial equivalence as 120% of the PBGC rate. In this case, you would enter 1.2 here.
• Rounding of Resulting Rate: use the Rounding Type and Rounding Unit fields to indicate how to round the rate selected based on the parameters above.