The retirees’ main claim is that the plan’s use of mortality tables from 1971 and 1983 to convert default retirement benefits into the alternative benefits that they opted to receive constitutes unreasonable actuarial assumptions.
The case applied to several DB plans sponsored by the company and challenged the use of an "inherently unreasonable" mortality table for calculating benefits.
IRS Notice 2019-67 specifies updated mortality improvement rates and static mortality tables to be used for defined benefit pension plans during 2021.
As the complaint points out, the Society of Actuaries has published some five updates to its mortality assumptions since the mortality table used by defendants was published way back in 1971.
The SOA says most plan sponsors that update their mortality assumption from the RP-2006 tables to the new tables will experience only a small change in their pension liabilities, usually within plus or minus 1%.
The IRS has issued Notice 2019-26, which specifies updated mortality improvement rates and static mortality tables, as well as a modified unisex version of the mortality tables, to be used for defined benefit (DB) plans.
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.
The SOA’s public-sector mortality study is designed to provide public pension actuaries and plan sponsors with information to help set mortality assumptions and includes separate mortality tables for teachers, public safety professionals and general members, respectively.
The IRS notice also includes a modified unisex version of the mortality tables for use in determining minimum present value for distributions with annuity starting dates that occur during stability periods beginning in the 2019 calendar year.