Retirement: declared obligations could increase up to 7%

The Canadian Institute of Actuaries has published the first report of mortality tables and scales of mortality improvement, based on the Canadian experience of mortality of retirees. The figures show a higher life expectancy and a variable increase of declared obligations depending on the pension plan.

Up to now, studies were based on type tables produced in the United States. The new tables are the result of four years of work and were conducted from data provided by the Canada Pension Plan, the Régime de rentes du Québec and certain of the country’s private and public pension plans. These new tables show in particular that current mortality rates are lower than those provided for on the other side of the border and future rates should follow this trend.

Increase in life expectancy

According to the old mortality tables and improvement scales from the United States, a 65 year old man has a life expectancy of 19.8 years and a woman 22.1 years. With these new tables, the figures go to 22.1 and 24.4 years respectively. Jacques Lafrance, president of the Canadian Institute of Actuaries, has said that these new tables will for the first time allow the use of tools that reflect mortality experienced by Canadian retirees.

Variable financial implications

From one pension plan to another, adoption of these tables may have very different financial implications. Although obligations declared in respect of pensions may reach an increase of 7%, they should rather increase within a range of 3 to 4% in general. For pension plans that already take their own mortality experience into account, the increase should be between 1 and 2%.

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