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Life expectancy higher

Assumed life expectancy with the Canadian Institute of Actuaries (CIA) draft ‘Task Force Report on Mortality Improvement’ combined with the base mortality table CPM2014 is about one per cent to 1½ per cent higher than the life expectancy calculated using the more common CPM-B scale, for both males and females, says a Morneau Shepell ‘News & Views.’ The impact on pension values would be about 0.5 per cent. Using the new scale would result in a similar increase in the value of plan liabilities. This means that sponsors of pension plans that are not fully funded on a going-concern basis could see an increase in their amortization payments and in their current service contributions. A similar impact could also be expected on liabilities and current service cost for accounting purposes if the new scale is also considered the best estimate on that basis. However, for the time being, the new scale would not be used to calculate transfer values payable upon member termination since the assumptions used for these calculations are prescribed and based on CIA recommendations. (End of article)

Source: Benefits and Pension Monitor News