The Mortality Improvement Model, MIM-2021-v2

Link: https://www.soa.org/resources/research-reports/2021/mortality-improvement-model/

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Excerpt:

Different mortality projection methodologies are utilized by actuaries across applications and practice areas. As a result, the SOA’s Longevity Advisory Group (“Advisory Group”) developed a single framework to serve as a consistent base for practitioners in projecting mortality improvement.  The Mortality Improvement Model, MIM-2021-v2, Tools and User Guides, compose the consistent approach and are defined below.

  1. A report describing MIM-2021-v2 which summarizes the evolution of MIM-2021-v2; provides an overview of MIM-2021-v2; presents considerations for applying mortality assumptions in the model; and outlines issues the Advisory Group is currently considering for future model enhancements.
  2. A status report of the items listed in Section V of Developing a Consistent Framework for Mortality Improvement. This report advises practitioners about subsequent research and analysis conducted by the Advisory Group regarding these items.
  3. An Excel-based tool, MIM-2021-v2 Application Tool, and user guide, MIM-2021-v2 Application Tool User Guide, for practitioners to construct sets of mortality improvement rates under this framework for specific applications.
  4. An Excel-based tool, MIM-2021-v2 Data Analysis Tool, and user guide, MIM-2021-v2 Data Analysis Tool User Guide, for practitioners to analyze the historical data sets included in the MIM-2021-v2 Application Tool.

The Longevity Advisory Group is planning to update the framework annually as new data and enhancements become available. MIM-2021-v2 is the first revision since the initial release in April 2021.  This version uses the same underpinning as the initial MIM-2021 release but has been refreshed to include another year of historical U.S. population mortality data as well as more user flexibility and functionality to replicate RPEC’s MP-2021 and O2-2021 scales.  

Author(s): Longevity Advisory Group

Publication Date: June 2022, most recent update

Publication Site: Society of Actuaries

Who Cares About Life Expectancy?

Link:https://contingencies.org/who-cares-about-life-expectancy/

Excerpt:

Life expectancy at birth (LEB) in the U.S. has grown about 50% since 1900, with most of the increase going to upper income groups. (See “Differences in Life Expectancy by Income Level”; Contingencies;July/August 2016.)Depending on the data source and the methodology used to determine it, LEB in the U.S. is about 77 and 82 for males and females, respectively.

I’m a retiree, so I’m more interested in life expectancy at age 65 (LE65). (OK, fine, life expectancy at a somewhat higher age is more pertinent for me, but LE65 is the more common measurement.) LE65 in America is about 18.2 and 20.8 for males and females, again depending on the dataset and methodology.

LEB and LE65 in America are calculated from a dataset of 330 million lives. Another dataset of 7.5 billion lives provides a LEB of 68 and 72 for males and females, a significant difference from the LEB mentioned earlier. The 7.5-billion-life dataset was the world population rather than the U.S. population subset. A meaningful LEB requires homogeneity of the underlying dataset.

Author(s): Bob Rietz

Publication Date: Jan/Feb 2022

Publication Site: Contingencies

$59 Million Settlement in Pension Plan Outdated Actuarial Assumption Litigation

Link: https://www.natlawreview.com/article/59-million-settlement-pension-plan-outdated-actuarial-assumption-litigation

Excerpt:

A dramatic, recent example of this dilemma occurred in a Massachusetts district court proceeding, when an employer agreed to a $59.17 million settlement in a proposed ERISA class action accusing it of using outdated mortality rates to calculate pensions. Cruz v. Raytheon Co., Mass. Dist. case number 1:19-CV-11425-PBS, Feb. 16, 2021.

The employer had argued in its motion to dismiss that the retirees failed to make the case that the plan violated ERISA by unreasonably using a mortality table created in 1971 and a 7% interest rate to calculate retirees’ alternative annuity benefits it said would be “actuarially equivalent” to the plan’s benefits. The employer argued that its conversion factors for determining the alternative annuity benefits were reasonable and that the retirees were attempting to force their own arbitrary actuarial assumptions. The employer further asserted that under ERISA, employers sponsoring pension plans have wide discretion in determining which actuarial assumptions or conversion factors can be used, requiring only that the single life annuity (SLA) normal form of benefit is equivalent by actuarial standards.

Author(s): Jeffrey D. Mamorsky, Richard A. Sirus, Greenberg Traurig, LLP

Publication Date: 16 March 2021

Publication Site: National Law Review