Society of Actuaries Issues Updated Mortality Improvement Scale

On October 8, 2015, The Retirement Plans Experience Committee (RPEC) of the Society of Actuaries released an updated mortality improvement scale called MP-2015. The scale updates MP-2014, and is not a replacement of the base mortality tables which were released last year, but rather a supplement.  The MP-2015 scale is based upon data from the Social Security Administration and incorporates two additional years of data that reflect smaller improvements in longevity.

As stated in the report issued by the RPEC,  "To reflect this latest available data, RPEC is now publishing this 2015 update and intends on providing future annual updates to the model as soon as practicable following the public release of updated data upon which the model is constructed. RPEC expects the release of such annual updates to have a number of advantages including: (a) A decrease in the lag time between the most recent data used in the improvement scale and the date of application of that scale (b) More stable financial results, especially during multi-year periods over which mortality improvement is consistently increasing or decreasing."  Additionally, the report states that the RPEC is "actively investigating the possibility of obtaining more current information from the Centers for Medicare & Medicaid Services (CMS), the Centers for Disease Control and Prevention (CDC), and the Human Mortality Database (HMD)."

The impact of adopting the MP-2015 scale on pension and postretirement welfare benefit obligations is expected to be approximately 2% less than obligations measured using the RP-2014 tables.  However, for plan sponsors that developed their own individualized mortality tables, based upon their specific mortality experience, the MP-2015 scales will further support their assumption and adjustment to the respective benefit obligation.  The release of this new scale is an important consideration for plan sponsors in selecting their mortality assumptions going forward - and plan sponsors will need to consider plan type, plan provisions and as participant traits when assessing and/or adopting plan assumptions.  

As a reminder, MP-2015/RP-2014 base mortality tables and the MP-2015 scale are for financial reporting purposes only and have no impact on the pension funding or determination of minimum lump sums payments. The IRS stated in September 2015 that it does not intend to adopt the new mortality tables as issued by the SOA until 2017 at the earliest.  

Contact us if you're a plan sponsor and need help with the consideration of the updated mortality scale and visit the Schneider Downs Our Thoughts On blog to read other ERISA articles.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2022 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
2023 Cost-of-Living Adjustments for Retirement Plans and IRAs
Audit, ERISA BY Patti Giudici
IRS Notice 2022-33 – Extensions for Certain Provisions of the SECURE Act, CARES Act, and Miners Act
SDWMA Named One of the Nation’s Top DC Advisor Teams in 2021 by NAPA
DOL Releases Cautionary Guidance on Crypto in Retirement Plans
The Russia/Ukraine Conflict: What Happened and What it Means for Investors
Audit, ERISA BY Patti Giudici
Are You Ready to Implement SAS 136?
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.