Update from ASC Actuaries

2015 Mortality Projection Scale & 2015 Budget Act Pension Provisions

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MP-2015 Mortality Improvement Scale
In October 2015, the Society of Actuaries released the MP-2015 Mortality Improvement Report and the MP-2015 Projection Scale that goes with that report. This projection scale is designed to replace the MP-2014 scale released last year. The new scale added the two most recent years (2010 and 2011) of mortality improvement information available from the Social Security Administration to the mortality improvement information used in developing the MP-2014 projection scale. The MP-2015 projection scale shows a slight decrease in improvement and therefore results in slightly lower present value factors. Install the Fall 2015 Release and WinPatch B to have the newly released MP-2015 2-Dimensional projection scale for Males and Females included on your system.
Bipartisan Budget Act of 2015
PBGC premiums are scheduled to increase significantly starting in 2017 due to the passage of the budget deal signed into law in October. The 2016 premium rates were updated in the Fall 2015 Release (flat rate of $64, variable rate of $30 per every $1,000 of underfunding). The 2017, 2018 and 2019 rates were part of the budget deal that continues a recent legislative trend of increasing the premiums aggressively. The following chart summarizes the rates through 2019. Rates will be subject to indexation after 2019. ASC plans to update the rates in the PBGC Premium Information screen in the Fall Release preceding the year the rate goes into effect.
Year Flat Rate per participant Variable Rate per $1,000 of Underfunding
2016 $64 $30
2017 $69 $33
2018 $74 $37
2019 $80 $41

Another provision of the budget bill is an acceleration of the due date for premium payments from October 15 to September 15 in 2025 only. Finally, the corridors for setting the interest rates for the minimum required contribution calculations have been extended. HATFA was the latest legislation that adjusted the segment rate corridor and under this law, the 10% corridor was set to expire in 2017 and grade in to 30% (in 5% increments) starting in 2021. The 2015 budget law keeps the 10% corridor in place until 2019 and delays the widening of the corridor until 2020. The corridor is now scheduled to reach 30% in 2023. These changes will be incorporated in the system as the changes become effective.

 

Date Posted: November 18, 2015