Tuesday, November 7, 2017

Sobering News Around 2018 Mortality Tables

Effective January 1, 2018, the IRS will implement new mortality tables to be used by Defined Benefit plan sponsors. A number of important things could occur when these new tables take effect, none of which are good news. These include:
  • an increase in the plan liabilities; 
  • an increase in the sponsor's minimum funding levels; and 
  • an increase in the PBGC premiums. 

As we know, these tables reflect the increase in participant longevity and have not been updated since 2008.

This change in assumed mortality rates goes into effect for plan years beginning January 1, 2018. In a recent article in Pensions & Investments, The Society of Actuaries is projecting the following impacts:
  • minimum required contributions will increase by 11%; 
  • for funding targets, liabilities will increase by 2.9%; 
  • funded status will drop by 1%; and 
  • PBGC premiums would increase by 12%. 
Strategic Benefit Services can help mitigate the impact of these updated mortality tables by instituting cost effective, de-risking strategies. If desired, we will also develop a structured path leading to plan termination.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.