2019 Mortality Table and Improvement Scale Updates

The Society of Actuaries has been updating the mortality improvement scale on an annual basis since 2014. As a result, Scale MP-2019 represents the most recent mortality improvement scales. Also, a new base mortality table was released, Pri-2012 (which was developed from data for years 2010-2014), which replaces the RP-2006 base mortality tables (which were developed from data collected for years 2004-2008).

The difference to Scale MP-2019 from Scale MP-2018 is that the 2017 data has been added to the historical United States population mortality experience that is incorporated into the model. Otherwise, the underlying methodology has remained unchanged. Because 2017 data primarily indicated low or negative mortality across the United States, this data might potentially cause pension liabilities to decrease when plan sponsors update from Scale MP-2018 to Scale MP-2019 and start to use Pri-2012 base mortality rates. The preliminary estimate of the decrease is between 0.3% and 1.0%, varied by the mix of characteristics (collar, age and gender) of a given plan’s population as well as the discount rate and other assumptions used to determine the liability.

For financial statements of plan sponsors and employee benefit plans with balance sheet dates before October 24, 2019 that have not yet been issued, plan sponsors should consider this new information as a recognized subsequent event, and should determine the impact of it to those financial statements. In addition, while determining mortality assumptions for 2019 year-end financial reporting, plan sponsors should consider this new data for defined benefit pension and other postretirement benefit plans.