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Old 09-12-2014, 01:26 PM
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Mary Pat Campbell
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Default Mortality assumptions in public plans

I believe I put a precursor to these next two in the public pensions thread, but want to spin this topic off to its own thread.

http://www.forestparkreview.com/News...00-shortfall-/

Quote:
Forest Park's police and fire pension systems took a hit this year because a simple actuarial change recalculated how long safety personnel can be expected to live. Actuary Timothy W. Sharpe, of west suburban Geneva, changed one element of his calculations last year, revealing a $104,000 shortfall in the police pension fund and a $94,000 shortfall in the fire pension fund.

.....
The change came when Sharpe switched last year from a 1971 mortality table to a new table that more accurately reflected the lifespans of police officers and firefighters living in 2000.

For more than a decade, Sharpe had been using a group annuity mortality table called the GAM-1971. As its name implies the table was created in 1971 using mortality data from police officers and firefighters collected between 1964 and 1968. Life expectancies on the tables tracked public safety workers who, at age 50, would have been born between 1914 and 1918.

According to the updated table, called the RP-2000, male police and fire personnel at age 50 in 2000 could be predicted to live an average of 4 years longer than they did on the 1971 table. Statistically, most firefighters and police officers are male. Longer-living employees mean more money needs to be socked away in pension plans to cover their retirement.

Sharpe was criticized for using the 1971 tables in his calculations.

.....
Sharpe defended his actions saying he was using the same tables the Illinois Department of Insurance offered until 2012.

Chicago actuary Sandor Goldstein, who was asked to file complaints on behalf of Champaign and Hinsdale's police and fire boards, told the Review the Department of Insurance was "way out of date" by offering the 1971 tables. He said professional literature always urged actuaries to use relevant mortality tables.

But according to Sharpe, pension boards would request a calculation from the state Department of Insurance and then a second calculation from him.

http://www.wirepoints.com/busted-45-...t-wp-original/

Quote:
∑ How many other pensions are using outdated actuary tables and why isnít that information readily available? The Illinois Department of Insurance has it but you have to file a Freedom of Information Act request to get it. Inexcusable.

∑ Are even the supposedly more modern mortality tables accurate? As Ms. Lotus points out, the 1971 tables (called GAM 1971) are based on data three to seven years prior to that. A commonly used modern one is the RP-2000. Is it based on data now 17 to 21 years old?
....so, how often are mortality assumptions changed in public pension plans?

I don't really have an issue with (not-that-)old data trended to present being used, but when it's based off of people who died before I was born, I start to wonder.
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Old 10-24-2018, 04:25 PM
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I was looking for something else and found this thread.

Well, we know how the Sharpe situation ended up
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Old 10-24-2018, 04:27 PM
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Also, the SOA has done some work here this year

https://www.soa.org/experience-studi...irement-plans/

Quote:
Exposure Draft: Pub-2010 Public Retirement Plans Mortality Tables
The Society of Actuaries' Retirement Plans Experience Committee (RPEC) has released an exposure draft of the Pub-2010 Public Retirement Plans Mortality Tables. The primary focus of this study was a comprehensive review of recent mortality experience of public retirement plans in the United States.

The exposure draft report can be found below under "Materials". Also included below are two Excel files containing the Pub-2010 amount-weighted and Pub.H-2010 headcount-weighted mortality rates. A third Excel file containing a pivot table that allows users to create custom views of the data has also been provided. Finally, the original data request package has been posted for reference.
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Old 10-24-2018, 04:27 PM
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https://www.soa.org/research-reports...ion-mortality/

Quote:
U.S. Public Pension Plan Mortality Assumptions
August 2018

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.
June 2018

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.
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