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August 05, 2021 at 11:54 AM
What You Need to Know
- From 2014 through 2017, the age-standardized mortality rate for men in the general U.S. population improved by 0.6% per year.
- For men in U.S. pension plans, the age-standardized mortality rate improved by 1.4% per year.
- The gap was even bigger for the men on track to collect the biggest pensions.
Companies that use death rate statistics for the entire U.S. population to run pension plans could face a big forecasting problem: Mortality rates have been improving much more quickly for U.S. pension plan participants than for other Americans.
Death has been going so much easier on pension plan participants than on everyone else that basing pension benefits liability estimates on general population mortality data could wreck the estimates, according to analysts at Club Vita.
Club Vita is a company that helps pension plan sponsors, investment firms and other organizations estimate how long the plan participants might live.
Club Vita analysts recently combined their ability to analyze pension plan participant data at the ZIP code level with ideas from a paper by Magali Barbieri, who used government data to show how a U.S. county’s social and economic status might affect residents’ life expectancy.
The Club Vita analysts looked at how income and participation in a pension plan affect U.S. adults’ life expectancy.
The Data
Barbieri found that, since 1982, average life expectancy at birth has been improving much more quickly in the higher socioeconomic status counties than in other counties.
The Club Vita analysts looked at data for the period from 2014 through 2017 — before COVID-19 came along — and concluded that something similar is happening to pension plan participants.
“Pension plan participants have recently experienced much higher mortality improvements than the general U.S. population,” the analysts wrote.
