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Version 5.09 released July 25, 2003
Release Notes for Version 5.09 Update to Pension Evaluation module.
In this release, we updated the pension evaluation module to give our customers the option to use the GAR-94 Tables and method.
The GAR-94 Mortality Tables are a major update of the old GAM-83 table from the Society of Actuaries. ("GAR stands for "Group Annuity Reserving." GAM stands for "Group Annual Mortality.")
With these tables, the Society of Actuaries introduced a new concept into mortality
Tables. That concept is automatic adjustment for decreasing mortality.
The idea is that a person who is age 65 in 2010 will, on average, be slightly less likely to die at age 65 than a person who is age 65 in 2005. This is based on a projection of past historical observation, and it occurs because of the progress of medical science, greater health awareness in the population, and other factors.
To implement this notion, in addition to the GAR-94 table, which reflects mortality as of 1994, the Society of Actuaries has introduced a second table, called "Projection Scale AA", which indicates projected declines in mortality.
The two tables are then mathematically combined, so that mortality reflects not only a person's age, but also the calendar year in which he or she attains that age.
Family Law Software now includes the GAR-94 tables and that mathematical combination, and so its mortality figures are as accurate and up-to-date as can be.
For many years, mortality calculations were known by a shorthand of "GATT" and "PBGC."
The so-called "GATT" approach was actually an approach that used the GAM-83 mortality table and a unisex approach. You can still get the "GATT" result in
Family Law Software today by selecting the GAM-83 mortality table and unisex method. ("GATT" stands for the "General Agreement on Tariffs and Trade," a trade agreement which, in an obscure provision, specified a method for calculating pensions for certain purposes.)
The so-called "PBGC" approach was actually an approach that used the GAM-83 gender-specific mortality table. You can still get the "PBGC" result in
Family Law Software today by selecting the GAM-83 mortality table and gender-specific method. ("PBGC" stands for "Pension Benefit Guaranty Corporation," which used to issue mortality tables, but has not done so for many years.)
Both the "GATT" and "PBGC" approaches are now obsolete under the new GAR-94 mortality tables and date-adjusted mortality.
The IRS has recognized this, by mandating (in Revenue Ruling 2001-62) that for certain
calculations (but not this one), pensions use the GAR-94 table with a unisex approach.
The IRS's decision to use a unisex rather than gender-specific approach was driven by a legal requirement that itself was driven by politics. A unisex table will not yield the most accurate pension valuation. Women on average live longer than men. A unisex table averages women's and men's mortality, thus losing accuracy for both genders. We recommend that our users select the more accurate gender-specific approach.
However, we do provide the option to select the unisex option for those who prefer, for whatever reason, to follow the IRS's lead as specified in Revenue Ruling 2001-62.
We also made a change in reporting (unrelated to the GAR-94 tables). If the "as of" date for retirement was the early retirement date, our reports were nonetheless starting distributions at the regular retirement date. The reports now show pension distributions occurring on whatever payment date is selected as the "as of" payment date.
Simplification of Pension Evaluation module
In the Advisor, we now use the results of the pension evaluation and projected pension dates and payout amounts in our reports.
Previously, we calculated the pension evaluation, but then asked our users to make another set of entries to determine the pension values and payouts we would use in our reports.
We concluded that the extra layer of flexibility was unnecessarily complicating the process, and we removed it.
Child Support Calculators
Clarification of Florida Child support calculation, line 22. Updated the text to explain of the confusing netting that is going on. This applies only in cases where custody is substantially shared.
California children. Made it easier to delete a child in the California Child Support Calculator. Now, it is only necessary to delete the child's name.
Bugs fixed.
Pension distributions in net worth. We had been including pension valuations in net worth, and then actual retirement distributions in net income and net worth as well, which double-counts the value of the pension in net worth. This affected only clients who have defined-benefit pensions, and who are close enough to retirement to have pension distributions occurring in the next 30 years. And it only affected net worth in those later years. To prevent double-counting, we now subtract retirement distributions from net worth (but we do include them in net income). The theoretically-correct approach would perhaps be to include the retirement distributions in net worth, but to recalculate the pension's value each year, and show it as declining during the years that the pension is in payment status. We believe that in this case the theoretically-correct approach is computationally intensive (it will slow the program down) and also confusing to clients (why is my pension value jumping around?). So we have, for now, opted simply to subtract pension payments from net worth, which gives us a reasonable approximation to the correct result, and which is faster and easier for clients to understand.
Pension distribution questions. If the pension owner was not the person entered as "You," we were showing suggestions about QDRO (or not showing them) at the wrong times. Ditto for questions on pension distributions. That has now been fixed.
We also fixed two bugs that affected only the most recent previous release (sales between July 11 and July 25, 2003):
- Sample file. We omitted the sample file from the previous release. It is included in this release.
- Personal Edition "Law" tab. In the previous release only, the program would crash if someone selected a state's law to use. That has been fixed. Back to
"About This Release" Page
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