Age-adjusted US population mortality rates rose 1.2% between 2014 and 2015, the first year-over-year mortality-rate increase since 2005, according to the latest update of the Society of Actuaries’ (SOA) annual mortality improvement scale, released Friday.
Life expectancies fell slightly due to an increase in mortality from eight of the 10 leading causes of death in the US, as reported by the Center for Disease Control and Prevention (CDC), according to the updated scale, known as MP-2017.
MP-2017 also suggests that the slight decline in life expectancies may lower pension plan obligations by 0.7—1% when calculated using a 4% discount rate. Compared to MP-2016, the life expectancies for 65-year-old men and women declined from 85.8 and 87.8 to 85.6 and 87.6, respectively, in MP-2017.
The report includes additional resources, such as a sensitivity analysis to model the impact of different improvement models or annuity factors for (pension?) plan funding purposes.
MP-2017 was developed by the SOA’s Retirement Plans Experience Committee (REPC). It incorporates the latest publicly available mortality data from the Social Security Administration (SSA) through 2013. It also includes preliminary data from 2014 and 2015.
“The SOA is a data-driven organization committed to annually updating the mortality improvement scale as new data is available,” Dale Hall, managing director of research for the SOA said in a statement. “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 report comes several weeks following the IRS’s release of its 2018 mortality table update. MP-2017 was not factored into the IRS evaluation because it was released after the IRS issued its guidance for 2018 mortality tables, Hall told CIO.
“Our understanding at the Society of Actuaries is that the IRS will continue to evaluate and take into account new mortality updates as they’re released, and may evaluate MP-2017 for future mortality tables. However, the Society of Actuaries doesn’t have any insight into what decisions the IRS will make in the future. We are ready to answer their questions and provide any technical information they might request,” Hall said.
Tags: mortality tables, MP-2017, Pension, Society of Actuaries