The Society of Actuaries (SOA) released an updated mortality improvement scale for pension plans that incorporates two additional years of Social Security mortality data that have been recently released.
The updated scale—MP-2015—reflects a trend toward somewhat smaller improvements in longevity. The improvement scale includes Social Security Administration mortality data from 2010 and 2011.
“The data continues to show that people are living longer, but longevity is increasing at a slower rate than previously available data indicated,” says Dale Hall, managing director of research for the Society. “The new improvement scale will ensure the pension actuarial community has the most up-to-date information available to help them accurately measure private retirement plan obligations.”
In October 2014, the Society released the RP-2014 base mortality tables and MP-2014 improvement scale, the first update to the SOA’s pension plan mortality tables in more than a decade. At that time, the SOA indicated the mortality improvement scale (used to project mortality rates) would be updated more frequently as new longevity data became available.
The SOA’s preliminary estimates suggest that updating to the MP-2015 scale might reduce a plan’s liabilities by between 0% and 2%, depending on each plan’s specific characteristics.
According to Hall, “Every plan is different, and it is important that professionals working in this field perform their own calculations on the impact to their plan. It is up to plan sponsors, working with their plan actuaries, to determine whether to incorporate MP-2015 into their plan valuations.”
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