Between 2014 and 2015, mortality rates increased 1.2%, according to the Society of Actuaries’ (SOA’s) analysis of publicly available data from the Social Security Administration through 2013, and its analysis of preliminary 2014 and 2015 data. This MP-2017 finding is the first year-over-year mortality rate increase since 2005, SOA says.
As a result of the slight decline in life expectancies, pension plan obligations can be reduced between 0.7% to 1.0%, SOA says. SOA says that the increase in mortality is due to an increase in eight of the 10 causes of death, as reported by the Centers for Disease Control. For example, the life expectancy for a 65-year-old male pension plan participant in 2017 declined to 85.6 years, down from 85.8 in 2016. For women in that time period, their life expectancies dropped from 87.8 years to 87.6 years.
“The SOA is a data-driven organization committed to annually updating the mortality improvement scale as new data is available,” says 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 full MP-2017 report can be downloaded here.