Administration October 23, 2018

SOA Mortality Scale Update Could Decrease Pension Plan Obligations

When compared with 2017 projections, life expectancy for 65-year-old private pension participants decreased slightly less than one month for women, and faintly more than a month for men.

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The Society of Actuaries (SOA) has updated its annual mortality improvement scale for pension plans through the publication of “MP-2018,” finding a decline in future rates of mortality improvement and lower pension plan obligations compared with its 2017 scale.

The SOA’s projections suggest that adding the MP-2018 improvement scale could sink pension obligations by 0.2% to 0.4% for women, and 0.3% to 0.6% for men, when gauged with a 4% discount rate.

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Additionally, the recent scale shows a slim drop in life expectancy due to raised mortality rates for three out of the 10 leading causes of death in the U.S., which according to the Centers for Disease Control and Prevention (CDC) are unintentional injuries (with a 9.7% increase in mortality rates); Alzheimer’s disease (3.1% increase); and suicide (1.5% increase).

When compared with MP-2017, life expectancy for 65-year-old private pension participants decreased slightly less than one month for women, and faintly more than a month for men. According to the new report, life expectancy for men is now at 85.6 total, and 87.61 for women.

“In MP-2018, we see continued reduction of overall U.S. mortality improvement trends that we started seeing in 2010,” said Dale Hall, managing director of research for the SOA. “However, because we are also continuing to see varied mortality improvement across the age groups, it’s imperative for industry professionals to perform their own calculations, using the demographics of their pension population to determine the impact of implementing MP-2018 on their individual plan.”

For more information, read the full Mortality Improvement Scale MP-2018 report here. 

Data and Research October 23, 2018

Millennials Say They Find Financial Planning ‘Exciting’

However, 82% of Millennials say their financial planning needs improvement.

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Among the generations in the U.S. workforce, Millennials have the strongest instinct to develop a financial plan—yet they feel the most anxious and insecure that they will get it right, according to Northwestern Mutual’s 2018 Planning & Progress Study.

Twenty-nine percent of Millennials say that financial planning makes them feel “excited and inspired,” compared to 12% of Boomers and 22% of Gen Xers who say the same.

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Fifty-seven percent of Millennials say they are either “highly disciplined” or “disciplined” financial planners, compared to 49% of Gen Xers and 45% of Boomers.

However, 82% of Millennials say their financial planning needs improvement, compared to only 79% of Gen Xers and 63% of Boomers. Only 40% of Millennials say they have the right balance in mind on how much they can afford to spend versus how much they should be saving for the future; this compares to 56% of Boomers and 47% of Gen Xers.

Seventy-eight percent of Millennials do not think they have found the right balance between present and future financial responsibilities. That compares with only 74% of Gen Xers and 57% of Boomers.

Twenty-nine percent of Millennials say they feel afraid, uncomfortable or guilty spending money even when they can afford to. This is true for only 22% of Gen Xers and 16% of Boomers.

“Millennials appear to understand more than any other generation the importance of creating a sound financial plan—yet are the least confident they’ve got it right,” says Emily Holbook, director of planning at Northwestern Mutual.

The survey also found that Millennials carry an average of $36,000 in debt and spent 34% of their monthly income paying it down. Boomers also have $36,000 in debt; Gen Xers, $39,000.

The Harris Poll conducted the online survey among 2,003 adults in March.

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