Public Plans Get a Table

The first mortality tables specifically for public-sector pension plans — identifying teachers as likely the largest public pension obligation cohort — are reported to be out and actuaries like it:

The new tables are welcome, said Kevin Woodrich, a principal consulting actuary with Cheiron Inc. in Charlotte, N.C., because the significant amount of information allows public plan officials to dissect by job category.

“How different are (public plans) from the private sector, and within the public sector? It gave us the ability to produce that kind of table. It is important because now (public plan officials) can use it as a benchmark comparing to other public plans,” said Mr. Woodrich, who served on the SOA Retirement Plans Experience Committee producing the tables.

“It also allows plans the ability to use a variation tailored to their actual experience. In the past, they may have had to rely on tables based on private-sector data,” Mr. Woodrich said.

The Society of Actuaries (SOA) released the new table last month after an “exposure draft of the mortality tables was released to industry stakeholders for feedback in the fall of 2018.”

Officially known as the Pub-2010 Public Retirement Plans Mortality Tables Report, it is the first look at public-sector mortality distinct from the private sector. The findings are based on the experience of 35 public systems covering 78 retirement plans between 2008 and 2013, broken down by three job categories: general employees, public safety employees and teachers.

So why do public plans really need their own table?

In 2018 private-sector plans got a new table which increased liabilities by, on average, 5% and is required to be used for funding.

For those who see little difference in life expectancies for someone teaching at Harding School or St. Theresa it is hard to justify separate mortality tables especially when one is in general use and readily available, which may not be the case in a few years (the readily available part I mean). So to provide public plan actuaries with funding flexibility (ie. maintaning low-ball contributions) in comes the SOA.

27 responses to this post.

  1. Posted by NJ2AZ on February 4, 2019 at 2:38 pm

    this makes me think of my 3rd grade teacher Mrs Fiverson, who was an old lady 30 years ago when i was in the 3rd grade and who i recently saw is still alive (in her 90s) and collecting a pension from the state of NJ!

    Reply

  2. Posted by Brian on February 5, 2019 at 7:44 am

    The public plans mortality is actually significantly lower than that observed in private plans. For a 65-year old female retired teacher, the public plans mortality that you link to produces annuity values that are 5 to 7% higher (depending on discount rate) than those produced by the IRS table you linked to. That means the estimated liabilities of the pensions would be 5 to 7% higher than if based on the IRS table.

    Development of the public plans mortality table was an effort to properly reflect the observed mortality patterns, not an attempt to minimize liability estimates.

    Reply

  3. Posted by geo8rge on February 5, 2019 at 10:46 am

    “For those who see little difference in life expectancies for someone teaching at Harding School or St. Theresa it is hard to justify separate mortality tables especially when one is in general use and readily available, which may not be the case in a few years (the readily available part I mean). So to provide public plan actuaries with funding flexibility (ie. maintaning low-ball contributions) in comes the SOA.”

    I don’t understand this paragraph. I thought the issue was that previously it was estimated that teachers lived to be typically 75-80, like other ‘middle class’ Americans, but in actuality typically lived to 85-90. Which could mean increased retirement and healthcare payments of 10 years greater than estimated? What will NJ’s funding ratio be using the new estimates?

    I also could not help but think the new private sector actuarial tables came out at the same time Sears, GE and other old line companies with pensions seem to have gotten into financial difficulties.

    Reply

    • Posted by Anonymous on February 6, 2019 at 10:38 am

      I also am unclear what the heck you were trying to say here. Is it the public tables or the RP tables that you think won’t be readily available?

      Reply

  4. I can only say that in my town senior tennis(doubles ) and golf tournaments are dominated by teachers who have spent many summers honing their craft and have a number of more years earlier in retirement (from 60+) to exercise their skills. I don’t have the numbers but am heavily involved in park/rec activities in a town of 50,000 and have see this for years

    Reply

    • Posted by Tough Love on February 5, 2019 at 4:57 pm

      The cruse lines would go out of business if it were not for Public Sector workers who retire (with unreduced pensions and frre/cheap retiree healthcare benefits) while those of us in the Private Sector work for 10+ MORE years.

      Reply

      • Posted by El Gaupo on February 5, 2019 at 5:10 pm

        Nonsense. Do you have facts to back that statement up? My guess is it is the same percentage of public employees on a cruise line as in the general population. So there. Got a problem with EQUAL??
        Although the Disney Dream was very nice. The handsome does tend to get sea sick so I tread carefully when it comes to sailing the high seas.

        Reply

        • Posted by Tough Love on February 5, 2019 at 7:27 pm

          Nonsense ???????

          One heck of a comment from one who just yesterday told the readers that he may well be retiring after 25 years as a NJ PO with a 65%-of-pay pension starting (with NO actuarial reduction) at the ripe old age of 49 !

          Reply

          • Posted by El Gaupo on February 5, 2019 at 8:58 pm

            Very well may. Might stay till 30 years though. Either way, you up for a round of golf? I’m actually pretty good on the links. One of my many talents. Better than puking over the side of a cruise ship. Lol. Actually I can handle the cruise for a few days with the bracelet thingy.
            They arrange for me to fly out on my helicopter and land on the ship. You know cause I make such a fortune protecting your behind. 😃

          • Posted by Tough Love on February 5, 2019 at 10:44 pm

            El gaupo,

            We’ve talked about “moochers”.

            Any mirrors in your house ?

          • Posted by El Gaupo on February 5, 2019 at 11:14 pm

            Yes. Where you see a “moocher”, I see a pillar of society and someone so damn handsome I can’t stop looking. Lol. A legend

          • Posted by Tough Love on February 5, 2019 at 11:27 pm

            El gaupo,

            I recommend retirement ASAP …….. being delusional is not a desirable trait for a PO.

          • El Gaupo + Tough Love = Douglas/Earth + Seesaw
            All True 💑
            Have you four ever double dated ?? 🙂

            🐶🐶🐾🐾🐾

          • Posted by El Gaupo on February 6, 2019 at 8:05 am

            Now who is delusional. Lol.

        • Posted by stanley on February 6, 2019 at 9:29 am

          The Constable: “Nonsense. Do you have facts to back that statement up?”

          Don’t try for detective, Constable, you’ll never make it. You’d have to plant evidence. I don’t think you need a big study to support the idea that retired public employees do a large trade with the travel and recreation firms. Just common sense! Considering funding status and taxing possibilities, there might be a short interest trade in the works there.

          Did anyone notice the long neck ties last night? Walmart must have had a big sale on them. Looked funny! I wonder if Trump told Pence to have everyone wear a long tie to show commitment to the team.

          Reply

          • Posted by El Gaupo on February 6, 2019 at 11:35 am

            In the words of Joe Friday “just the facts ma’am”. Which she never provided. It is just her opinion or maybe she has a friend or two In the public sector who like to cruise. Although I doubt she could hide her resentment. Lol.
            Sorry, In my line of work we need more than a hunch.
            I think that you may see RETIRED public employees cruising yes. But I think that many private sector employees sure as heck know how to enjoy themselves too. Even if they are still working. If someone is 62. Whether or not they are still working I think doesn’t mean much if they want to take a cruise every couple years or so. You get some great deals in early December.

    • alandry…yes, I agree with you. In the town where I live there are many retirees and most of them I know to be retired public workers. I know this because it is a small population so you get to know people. They love to tell you how they retired in their 50s, most are the cops and teachers, school employees, etc. Most are also in their 80s and 90s still collecting for over 35 years. And I also agree that they do travel a lot thus, utilizing cruises, restaurants, etc. They also live in very expensive houses and no one seems very concerned about money constraints. They golf, play tennis, etc. which costs money.

      Now don’t get me wrong, I don’t begrudge but when we just read an article that confirms public employees especially teachers, live longer wouldn’t that suggest that they should be working longer thus reducing the pension liability?

      Retirement wasn’t meant to be a 30 year vacation…………and at life expectancies of 80-90 years no one and I mean no one should be retiring at 58. Cops are a different situation and the ones working on the mean streets should be able to retire early but only if desk jobs, etc are not available to transfer into those type positions.

      Sorry folks…..too many old people and not enough money to continue to support their lavish retirements

      Reply

    • alandry….and the teachers are the only ones who can continue to maintain the summer jobs such as life guarding, summer recreation, coaching, etc and earn another public pension although I believe many shore towns have since eliminated this type of thing but still have to pay for those living until 85-90 years old

      Atlantic City is the poster child for this sort of thing and look where they are…….takes a bunch of complete morons to screw up something like that

      Reply

  5. Posted by skip3house on February 5, 2019 at 11:48 am

    “… And then when the federal government can no longer print money that has real value, the whole house of cards, federal and state ,will be one great train wreck…” Jay Hoenemeyer.
    http://www.city-journal.org/state-pensions-mortality-rates

    Reply

    • Posted by skip3house on February 5, 2019 at 4:30 pm

      and…”.. renegotiate these failing ridiculous debt obligations on the basis of reality or you can ignore them completely and allow chaos to dictate how things will play-out…” Arlyn Showalter

      Reply

  6. Posted by NJ2AZ on February 5, 2019 at 3:36 pm

    i feel like more attention should be paid the Postal Service in terms of how things look when you are actually forced to pay for pension liabilities as they are accrued

    Reply

    • Posted by Tough Love on February 5, 2019 at 7:29 pm

      Actually, “funding” the USPS’s retiree healthcare promises is their bigger (and impossible-to-meet) problem.

      Reply

      • TL…..it’s all impossible but nobody has the answer on what to do as those in retirement on lavish pensions do help to support the local and national economies……the retirees would have to cut back dramatically ah but the Lord gives the Lord takes

        Reply

        • Posted by Tough Love on February 7, 2019 at 1:50 pm

          Quoting ………….

          “those in retirement on lavish pensions do help to support the local and national economies”

          MJ, you’re not seriously falling for that, are you ?

          If we cut Public Sector pensions by 50%, someone (i.e., the Taxpayers in most cases) benefits by an equal-and-opposite amount. Hence INCREASED taxpayer-spending would offset reductions in Public Sector retiree-spending.

          Sure, the timing of the offset may not be perfectly “matched” and the recipients of that spending may change (e.g. less on Public Sector retirees taking cruises and more food, rent, and clothing purchases by Taxpayers) but a near-equal offset would indeed result in short order.

          Reply

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