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SOA's New Mortality Tables May Not Affect Large Public Retirement Systems

New mortality tables may have little impact on the liabilities and contributions of most large public retirement systems, contrary to some news articles on the latest report of the Society of Actuaries' Retirement Plans Experience Committee.

That's because actuaries, in keeping with the Actuarial Standards of Practice, typically make adjustments to mortality tables to reflect the plans' actual experience and will simply use the tables as a road map of mortality across all ages.

Actuaries usually review mortality assumptions as part of experience studies every three to five years. Because most retirement systems won't consider using the latest mortality tables until their next experience study, any changes the actuaries make to reflect the new tables will not kick in until then.

The Pub-2010 Public Retirement Plans Mortality Tables Report released on January 22, 2019, by the RPEC was the first time the SOA identified teachers as having the highest longevity among public sector employees, raising concerns that the tables would raise teacher plans' liabilities and contributions in particular. However, many teachers' retirement systems already use mortality tables that reflect their participants' higher longevity compared to other public plan participants.

The new mortality tables may have a bigger impact on small public retirement systems which do not have much credible experience which actuaries can use to adjust the mortality tables. Nonetheless, the actual impact of these new tables on liabilities and on contributions will vary depending on the extent to which each system has already adjusted the mortality assumptions from the previous tables.

The RPEC based its findings on the experience of 35 public systems covering 78 retirement plans between 2008 and 2013. The committee developed separate tables based on employee status, gender and for three job categories: general employees, public safety employees and teachers.

Click here for the full SOA RPEC Pub-2010 report.

Please contact your Cheiron consultant to discuss the implications of the tables for your plan.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.

 
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