The Society of Actuaries (SOA) has updated its annual mortality improvement scale for pension plans through the publication of “MP-2018,” finding a decline in future rates of mortality improvement and lower pension plan obligations compared with its 2017 scale.
The SOA’s projections suggest that adding the MP-2018 improvement scale could sink pension obligations by 0.2% to 0.4% for women, and 0.3% to 0.6% for men, when gauged with a 4% discount rate.
Additionally, the recent scale shows a slim drop in life expectancy due to raised mortality rates for three out of the 10 leading causes of death in the U.S., which according to the Centers for Disease Control and Prevention (CDC) are unintentional injuries (with a 9.7% increase in mortality rates); Alzheimer’s disease (3.1% increase); and suicide (1.5% increase).
When compared with MP-2017, life expectancy for 65-year-old private pension participants decreased slightly less than one month for women, and faintly more than a month for men. According to the new report, life expectancy for men is now at 85.6 total, and 87.61 for women.
“In MP-2018, we see continued reduction of overall U.S. mortality improvement trends that we started seeing in 2010,” said Dale Hall, managing director of research for the SOA. “However, because we are also continuing to see varied mortality improvement across the age groups, it’s 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.”
For more information, read the full Mortality Improvement Scale MP-2018 report here.