June 4, 2015 (Updated August 7, 2015)
Update: Read the full report of the study results, which includes details about the study methodology and background on the SOA Mortality Tables.
A new Segal Consulting mortality study reveals that multiemployer plan liabilities and costs are likely to be lower than what would be expected using the recently released Society of Actuaries (SOA) RP-2014 Blue Collar Annuitant Mortality Tables. The Segal Multiemployer Pension Plan Mortality Study examined the experience of 271 multiemployer plans with nearly 200,000 deaths over the period from 2008 through 2013. This represents approximately 9 percent more deaths than what the RP-2014 Blue Collar tables would have predicted for the same period. The graph below shows how the Segal data compares to the RP-2014 Mortality Table predictions by industry.
The Segal Study shows that most industries experienced more deaths than anticipated by the RP-2014 Mortality Tables. For example, with a ratio of 1.21, iron workers experienced 21 percent more deaths than predicted by the RP-2014 Mortality Tables. One possible explanation is that the data used by the SOA to create the RP-2014 Mortality Tables is based largely on information from single-employer plans in a limited set of blue-collar industries and includes virtually no input from multiemployer plans.
The Segal Study shows that mortality is clearly not a one-size-fits-all assumption and that published tables need to be studied and understood in the proper context. Mortality is one of the most important plan assumptions and should be reviewed carefully and set individually for each plan. The Segal study uses actual multiemployer plan experience and the differential it uncovers is important because it translates into shorter life expectancy and potentially lower pension costs for multiemployer plans than would be the case if the RP-2014 Mortality Tables are simply accepted as the new standard.
For more information about Segal’s Multiemployer Pension Plan Mortality Study, contact your Segal Consultant or Harold Cooper at firstname.lastname@example.org.
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