August 3, 2015
Agencies Release Updated Static Mortality Tables for Defined Benefit Plans for 2016
On July 31, the Treasury Department and Internal Revenue Service (IRS) issued Notice 2015-53 regarding updated static mortality tables for defined benefit pension plans for 2016. The Notice specifies updated mortality tables to be used for purposes of calculating pension funding requirements, benefit restrictions, lump-sum calculations, Pension Benefit Guaranty Corporation (PBGC) premium payments, and other related purposes.
As requested by the Council in our March 23, 2015, letter to Treasury and the IRS, the updated tables for 2016 do not reflect the Society of Actuaries’ (SOA) RP-2014 Mortality Tables Report and the MP-2014 Mortality Improvement Scale published late last year. Those reports are controversial, and many Council members believe they overstate mortality improvement, and would thus inflate funding liabilities, lump sums, and PBGC premiums. For this reason, the Council’s letter asked that new tables reflecting the SOA reports not be adopted until 2017 following notice and comment.
In 2014, the Council sent letters to the SOA on May 30 and October 17 expressing concerns regarding the SOA process while urging the SOA not to rush the release of its final mortality table reports. The Council recognized the appropriateness of updating mortality assumptions to reflect greater longevity; there is considerable concern, however, among plan sponsors and within the actuarial profession that important data provided to the SOA was not considered during the process of developing the tables. In recent months, the Council has been in close contact with the Treasury Department and IRS and, as noted, formally requested a delay in the year for which the SOA tables are taken into account by Treasury and the IRS. The Council met with Treasury and IRS officials in June 2015 to outline its member concerns with the SOA’s reports. The Council continues to work with the agencies as the regulatory process unfolds.
For more information, contact Diann Howland, vice president, legislative affairs, Jan Jacobson, senior counsel, retirement policy, or Lynn Dudley, senior vice president, global retirement and compensation policy. All can be reached at (202) 289-6700.