The Canadian Institute of Actuaries (CIA) has issued the first-ever mortality tables and mortality improvement scales that are based on Canadian pensioner mortality experience.

The new studies show that Canadian pensioner mortality has improved significantly faster than projected by the commonly used U.S. standard tables in recent years.

As a result, the new tables indicate current mortality rates lower than those previously projected and that future rates of mortality improvement will be higher than those previously assumed.

The tables help actuaries that work with defined benefit pension plans develop assumptions about the mortality of plan members to assess what contributions are necessary, and what pension liability rests on the plan sponsor.

Prior to the introduction of the all-Canadian tables, pension actuaries could access primarily U.S.-based pension mortality tables to help them arrive at their assumptions. Many larger pension plans have derived mortality assumptions from their own experience, but many other plans have used the U.S. standard tables published in 1994. Apart from being potentially outdated, there was a concern that the U.S. pensioner experience was not necessarily reflective of Canadian experience. The CIA decided that it was time to collect the data necessary to create up-to-date Canadian pensioner mortality tables.

“These new mortality tables will, for the first time, allow CIA members to use tools that solely reflect Canadian pensioner mortality experience. This will allow actuaries to provide even more reliable calculations and estimates for the users of their services,” said Jacques Lafrance, CIA president, in a release.

Using the old U.S. standard mortality table and improvement scale, a 65-year-old man in 2014 has a life expectancy of 19.8 years, while with the new mortality table and improvement scale his life expectancy is 22.1 years.

For a 65-year old woman in 2014, the old U.S. standard mortality table and improvement scale indicates a life expectancy of 22.1 years, while with the new mortality table and improvement scale her life expectancy is increased to 24.4 years. These increases in assumed life expectancy are significant.

The financial impact of adopting the new tables may vary considerably between pension plans, the CIA notes.

“Reported pension obligations could increase by as much as seven per cent or more for some plans but, more typically, increases may be in the range of three to four per cent. For pension plans that are already reflecting their own mortality experience, the potential increase in pension obligations may be lower again perhaps in the one to two per cent range.”

Based in Ottawa, the Canadian Institute of Actuaries is the national organization and voice of the actuarial profession.