SCHAUMBURG, Ill., Oct. 20, 2017 /PRNewswire/ -- The Society of Actuaries (SOA) today released its annually-updated mortality improvement scale for pension plans, MP-2017, which reflects that age-adjusted U.S. population mortality rates increased 1.2 percent between 2014 and 2015. This is the first year-over-year mortality rate increase since 2005. The updated scale suggests that life expectancies declined slightly, which may also decrease pension plan obligations slightly. The SOA's preliminary estimates suggest that implementing the MP-2017 improvement scale could reduce a pension plan's pension obligations by 0.7 – 1.0 percent, when calculated using a four percent discount rate.
MP-2017 incorporates the latest publicly available mortality data from the Social Security Administration (SSA) through 2013. Additionally, MP-2017 includes 2014 and preliminary 2015 data, developed by the SOA and obtained from the SSA, Centers for Disease Control and Prevention (CDC), Centers for Medicare and Medicaid Services (CMS), and the U.S. Census Bureau. The updated improvement scale reflects a slight decline in life expectancy, stemming from an increase in mortality from eight of the 10 leading causes of death in the U.S., as reported by the CDC. For example, the life expectancy for a 65-year-old-male pension plan participant declined to 85.6 years using the MP-2017 scale, compared to 85.8 under MP-2016. Additionally, the average life expectancy for a 65-year-old female pension plan participant declined to 87.6 with MP-2017, from 87.8 with the MP-2016 scale.
"The SOA is a data-driven organization committed to annually updating the mortality improvement scale as new data is available," said Dale Hall, managing director of research for the SOA. "MP-2017 gives pension actuaries and plan sponsors current information to measure retirement obligations and make forward-looking mortality improvement assumptions. However, every plan is different, and it's important for actuaries and plan sponsors to perform their own calculations and decide how to reflect the impact of emerging mortality changes in their own plan valuations."
The MP-2017 report includes additional resources for pension actuaries, including a sensitivity analysis to model the impact of different improvement model assumptions on annuity factors for plan funding. The report was developed by the SOA's Retirement Plans Experience Committee (RPEC). For additional information, you can read the full Mortality Improvement Scale MP-2017 report here.
For supplementary SOA population mortality analysis reports, please visit: https://www.soa.org/research-reports/2017/us-historical-population-2000-2015/.
About the Society of Actuaries
With roots dating back to 1889, the Society of Actuaries (SOA) is the world's largest actuarial professional organization with more than 28,000 actuaries as members. Through research and education, the SOA's mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal challenges. The SOA's vision is for actuaries to be the leading professionals in the measurement and management of risk. www.SOA.org
SOURCE Society of Actuaries