Data & Research January 23, 2019

Among Gen Xers, Females Face Greater Retirement Uncertainty

According to an analysis from the Employee Benefit Research Institute (EBRI), single Gen X females are the only cohort with at least 50% of households having a deficit.

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A cut of data about Generation X from the Employee Benefit Research Institute’s (EBRI)’s Retirement Security Projection Model (RSPM), which can assess the size of households’ retirement deficit by modeling Retirement Savings Shortfalls (RSS), found the retirement deficit—or additional savings required to meet basic needs in retirement—is higher for both widows and single females than for widowers and single males.

The average RSS is $18,476 per individual for married households where the female dies first (widowers), the average RSS is $22,783 for married households where the male dies first (widows), the average RSS is $37,690 for single males, and the average RSS is $72,883 for single females.

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According to the analysis, single Gen X females are the only cohort with at least 50% of households having a deficit. The median RSS for this group is $19,900, and 10% of single females have an RSS of at least $222,592.

Nearly half (48%) of single females at the lowest income quartile have at least a $100,000 RSS (connoting serious potential financial complications in retirement). This compares to one-third of single males and 42% of widows. Even in the highest income quartile 13% of single females have an RSS of at least $100,000 versus 7% for single males, 4% for widows and 3% for widowers.

Defined contribution (DC) retirement plan eligibility helps with the shortfalls. Single females with no future eligibility in a DC plan have an average RSS of $97,325 versus the $24,486 average RSS of those with at least 21 to 30 years of future eligibility. The average RSS is $39,016 worse for single females than for single males with no future DC plan eligibility. The discrepancy in the average RSS between widows and widowers with no future DC plan eligibility is $6,529.

Auto portability—where a participant’s account from a former employer’s retirement plan would be automatically combined with their active account in a new employer’s plan—can also have a large impact, EBRI found. For those with 21 to 30 years of future DC eligibility, auto portability reduces the average RSS by 21% for single females to as much as 38% for widowers.

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Compliance January 23, 2019

Public Retirement Plan Mortality Tables Released by SOA

The Society of Actuaries points out that the financial impact of implementing the new public pension mortality tables will vary based on each individual job category, as well as the relative mix of member ages and other demographics in each pension plan.

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The Society of Actuaries (SOA) released first-of-its-kind public retirement plan mortality tables, Pub-2010, which includes the individual mortality experience for teachers (school teachers, college professors), public safety professionals (police, firefighters, correctional officers) and general employees (judges, military, administrative staff).

The SOA is releasing public plan mortality tables to give pension actuaries and plan sponsors current information to assist in setting mortality assumptions. This is the first time it has studied public retirement plan mortality separately from the private sector.

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Last August, the SOA released an exposure draft of the new public retirement plan mortality tables and requested comments. It developed the new tables once it was determined that public pensions have differing levels of mortality than private pensions.

The SOA’s mortality tables include 46 million life-years of exposure data and 580,000 deaths from 78 public pension plans and 35 public pension systems across the country. Analysis of the dataset reveals that teachers have the longest age-65 life expectancy of the job categories studied. Further, the amount-weighted, deferred-to-62 annuity values produced by the public-sector teachers’ tables were consistently larger than those produced by corresponding public safety and general employee tables. Generally speaking, this means that pension obligations for teachers are greater than obligations for other job categories, when comparing the same benefit amount.

The tables also suggest that higher income is correlated with lower mortality, as income succeeded job category as the most statistically significant mortality factor across all job categories.

The SOA points out that the financial impact of implementing the new public pension mortality tables will vary based on each individual job category, as well as the relative mix of member ages and other demographics in each pension plan. It encourages professionals in the field to perform their own analysis to understand the impact of these tables on their own plan. “It is ultimately up to plan sponsors, working with their plan actuaries, to determine how to incorporate emerging mortality and mortality improvement into their plan valuations,” the SOA says.

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