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

 
Author/Editor: Kisser, Michael ; Kiff, John ; Oppers, Stefan E. ; Soto, Mauricio
 
Publication Date: June 01, 2012
 
Electronic Access: Free Full text (PDF file size is 1,089KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: 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.
 
Series: Working Paper No. 12/170
Subject(s): Corporate sector | Economic models | Pensions | Private sector | United States

Author's Keyword(s): Pension Plans | Longevity Risk | Life Expectancy | Mortality
 
English
Publication Date: June 01, 2012
Format: Paper
Stock No: WPIEA2012170 Pages: 33
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org