A slight decline in life expectancy due to a rise in mortality rates from three of the top 10 causes of death has led the Society of Actuaries to believe pension plans could see their obligations reduced a bit compared to last year’s scale.
The organization’s annual mortality improvement scale, or MP-2018, calculated that fund responsibilities could drop between 0.3% and 0.6% for men, and between 0.2% and 0.4% for women, when calculated using a 4% discount rate. The new scale was released Tuesday.
The reason for the mortality change is a jolt in deaths over the year from unintentional injuries (up 9.7%), Alzheimer’s disease (3.1%), and suicide (1.5%), according to the Centers for Disease Control and Prevention (CDC).
The society’s analysis determined that the life expectancy for private pension members decreased by a little less than a month for women (age 87.61), and just over a month in men (age 85.6), compared to 2017. This means the average beneficiary will receive their pensions for 22.61 and 20.6 years, respectively, on average.
The yearly chart is made after data is collected and analyzed by the society from the Social Security Administration, the Centers for Disease Control and Prevention, the Centers for Medicare and Medicaid Services, and the US Census Bureau.
Dale Hall, the Society of Actuaries’ managing director of research, said the new scale continued trends that began in 2010.But, he added, because the age groups show varied levels of mortality, it is “imperative for industry professionals to perform their own calculations, using the demographics of their pension population to determine the impact of implementing MP-2018 on their individual plan.”
Tags: Mortality, Pension, Society of Actuaries