New SOA Mortality Tables for Private Sector Retirement Plans

Vectra DigitalBlog, Retirement

Last month (May 2019), the Society of Actuaries (SOA) released an exposure draft of the Pri-2012 Mortality Tables for private-sector retirement plans. These new tables are based on data collected for 2010 – 2014, with a central year of 2012. The Pri-2012 tables update the RP-2006 tables (the mortality table basis for the RP-2014 Mortality Tables that are currently in use). The RP-2006 tables were based on data collected from 2004 – 2008.

The goal of the current practice, with a base mortality table and regular improvement scale updates, is to see limited impact from mortality table changes going forward. This expectation has played out in the Pri-2012 tables, as shown in two highlights from the SOA’s Overview provided with the release (found here).

  • When comparing the RP-2006 and Pri-2012 total dataset tables (both projected using MP-2018), the life expectancy as of 2019 for an age-65 female remained roughly constant at 87.4 years, while for an age-65 male, the life expectancy declined from 85.0 years to 84.7 years.
  • Most plan sponsors that update their mortality assumption from the RP-2006 tables to the Pri-2012 tables will experience only a small change in their pension liabilities, usually +/- 1%. The amount will vary depending on the plan’s mix of collar, age, gender, as well as the discount rate and other assumptions used to compute liabilities.

The Pri-2012 report contains many different sets of mortality tables, including those based on the total dataset and those based on various subsets of the data (e.g., white/blue collar, headcount-/amount-weighted, etc.).

Comments are being accepted on the exposure drafted through July 31, 2019. Based on this timing, the final tables could be issued in late 2019 or early 2020. It is too early to know whether the IRS will adopt the Pri-2012 tables as the mortality basis for funding and administrative (i.e., lump sums) purposes, but we do not expect any change would occur before 2021 at the earliest.

The full set of documents, including the mortality rates and the exposure draft report, can be found on the SOA website here.

Feel free to reach out to your Foster & Foster consultant with any questions you may have.