Tuesday, October 24, 2017

Good news for pension plans: Reduced life expectancy means obligations could fall by up to 1 percent!

Every cloud has its silver lining.

From the story here:

The U.S. age-adjusted mortality rate—a measure of the number of deaths per year—rose 1.2 percent from 2014 to 2015, according to the Society of Actuaries. That’s the first year-over-year increase since 2005, and only the second rise greater than 1 percent since 1980. ... Declining health and life expectancy are good news for one constituency: Pension plans, which must send a monthly check to retirees for as long as they live.

According to the latest figures from the Society of Actuaries, life expectancy for pension participants has dropped since its last calculation by 0.2 years. A 65-year-old man can expect to live to 85.6 years, and a woman can expect to make it to 87.6. As a result, the group calculates a typical pension plan’s obligations could fall by 0.7 percent to 1 percent.