9 07, 2015

Bad Math and a Coming Public Pension Crisis

2015-07-09T21:41:43-07:00July 9th, 2015|Categories: Defined Benefit Plans|Tags: , |

When Jim Palermo was serving as a trustee of the village of La Grange, Ill., he noticed something peculiar about the local police officers and firefighters. They were not going to live as long as might be expected, at least according to pension tables. After Mr. Palermo dug into the numbers, he found that the actuary — the person who advises pension plan trustees about how much money to set aside — was using a mortality table from 1971 [...]

23 04, 2015

Living longer raises costs of public plans

2015-04-23T17:31:04-07:00April 23rd, 2015|Categories: Retirement|Tags: , , |

The fact that people are living longer is good news from a human perspective. But longer lifespans also make defined benefit pension plans more expensive because sponsors must pay benefits to retirees for a longer period of time. In 2014, CalPERS – one of the nation’s largest plans – revised its longevity assumptions, significantly increasing its liabilities and reducing its funded ratio by 5 percentage points. This event led us to wonder whether other shoes were about to drop [...]

19 03, 2015

Longer lives pose growing opportunity, bigger risks for insurers

2015-03-19T16:52:31-07:00March 19th, 2015|Categories: Pension Funding|Tags: , |

A confluence of demographic and economic trends make longevity risks perhaps the biggest growth opportunity for insurers, but writing such long-tail coverage profitably also might present the industry with its biggest challenge in the decades ahead. Retirement financing and securing lifetime income are the main objectives for most annuities holders today, according to the latest “Voice of the Insurance Consumer” survey by Deloitte’s Center for Financial Services. That means the stage is already set for potentially dramatic market expansion, given [...]

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