Mortality assumptions are a critical component of defined benefit (DB) liabilities and a key factor in determining the expected length of time for annuity payments. Except with very large companies that develop their own tables, all DB plans use industry mortality tables. Currently, the most common pension table series is the RP-2000, a set of mortality rates published by the Society of Actuaries (SOA) in the year 2000. The SOA recently released new mortality tables for pension plans that will in most cases significantly increase pension liabilities.
This Russell Investments Practice Note examines how the new RP-2014 mortality tables will affect the strategies DB plan sponsors have adopted or are considering.