SOA Mortality Tables Finalized for Private-Sector Retirement Plans

AdminBlog, Retirement

In 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 were 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.

On October 23, 2019, the SOA announced that the Pri-2012 tables have been finalized with no changes from the exposure draft. Comments on the draft were received and responded to as part of this final release.

As we noted in our notice on the exposure draft, with the current practice of a base mortality table with regular improvement scale updates, the goal would be 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 the life expectancy for an age-65 male 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, and 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.).

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 any change would not be expected to 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.