U.S. Public Pension Plan Mortality Assumptions
Mortality assumptions in use by public pension plans in the United States vary widely. This study updates and supplements the June 2018 study (below) and compares post-retirement mortality assumptions used for funding purposes by state-based and large-city public pension plans to the Pub-2010 Mortality Tables in terms of the annuity factors they produce.
Here is a high-level summary of key findings for annuity factors at ages 55, 65 and 75:
- For all job categories and ages, Pub-2010 annuity factors exceed the comparable average annuity factor for current assumptions. Pub-2010 factors are generationally projected to 2018 with improvement scale MP-2017 and range from 0.9% greater for age 75 female safety employees to 6.3% greater for age 75 male teachers.
- Mortality assumptions for teachers tend to result in larger annuity factors than for other job categories, as is consistent with the Pub-2010 tables.
- Mortality assumptions for male safety employees tend to result in larger annuity factors than for general employees, while assumptions for female safety employees tend to result in lower annuity factors than for general employees. However, the Pub-2010 tables indicate lower annuity factors for safety employees than for general employees across gender and age combinations, except for males age 55.
Mortality assumptions in use by public pension plans in the United States vary widely. This study compares the mortality assumptions used for funding purposes by state-based and large-city public pension plans in terms of the annuity factors they produce. Because mortality changes at older ages generally affect pension plan liabilities more than mortality changes at younger ages, this analysis focuses on post-retirement mortality assumptions.
Here is a high-level summary of key findings:
- The Retirement Plans Experience Committee (RPEC) and the SOA are working on a mortality study specifically for public pension plans in the United States. Based on RPEC’s preliminary findings, results of this analysis suggest that mortality assumptions for many plans may be lagging behind current aggregate mortality experience among public plans.
- Mortality assumptions for teachers tend to reflect longer life expectancies than for other job categories. For females, mortality assumptions for public safety employees tend to reflect shorter life expectancies than for general employees. Assumptions for males reflect the opposite.
U.S. Public Pension Plan Mortality Assumptions (June 2018)
The author thanks the following volunteers for their advice, insights and arm’s-length review of both studies prior to publication. Any opinions expressed may not reflect their opinions nor those of their employers. Any errors belong to the author alone.
David L. Driscoll, FSA, EA, FCA, MAAA
Timothy J. Geddes, FSA, EA, FCA, MAAA
David T. Kausch, FSA, EA, FCA, MAAA, MSPA
Laurence Pinzur, FSA
The author also thanks the following Arcadia University students and professor for their assistance and insights while gathering the data used in this analysis. Any opinions expressed may not reflect their opinions nor those of the university.
Irina Pogrebivsky, FSA, EA
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