The Impact of Longevity Improvements on U.S. Corporate Defined Benefit Pension Plans

John Kiff (), Michael Kisser, Mauricio Soto () and Stefan Oppers

No 2012/170, IMF Working Papers from International Monetary Fund

Abstract: This paper provides the first empirical assessment of the impact of life expectancy assumptions on the liabilities of private U.S. defined benefit (DB) pension plans. Using detailed actuarial and financial information provided by the U.S. Department of Labor, we construct a longevity variable for each pension plan and then measure the impact of varying life expectancy assumptions across plans and over time on pension plan liabilities. The results indicate that each additional year of life expectancy increases pension liabilities by about 3 to 4 percent. This effect is not only statistically highly significant but also economically: each year of additional life expectancy would increase private U.S. DB pension plan liabilities by as much as $84 billion.

Keywords: WP; mortality table; mortality rate; life expectancy; group Annuity mortality table; Pension Plans; Longevity Risk; Mortality; pension liability; Individual Annuity mortality table; freedom pension plan sponsor; DB pension plan provider; benefit pension plans; Pensions; Pension spending; Aging; Insurance; Global (search for similar items in EconPapers)
Pages: 34
Date: 2012-06-01
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Citations: View citations in EconPapers (4)

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