Actuarial Notes

Mortality Improvements Research: Educational Note Supplement

By Canadian Institute of Actuaries Committee on Pension Plan Financial Reporting · Canadian Institute of Actuaries · 2024 · Document 224064

Study guide: Exam RET-301

A Canadian Institute of Actuaries educational note supplement, dated May 15, 2024, issued by the Committee on Pension Plan Financial Reporting to comment on the research report Mortality Improvements Research, published by the CIA on April 11, 2024. It also examines the report's effect on guidance for setting best-estimate mortality assumptions for going concern funding valuations and for accounting valuations, under Sections 3200 and 3400 of the Standards of Practice.

On the syllabus

  • Exam RET-301 — Outcomes 1a, 1b (Assumptions); the whole supplement (CIA Educational Note Supplement, May 2024).

Preamble

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1 Educational note on selection of mortality assumptions

  • The December 21, 2017 educational note, Second Revision: Selection of Mortality Assumptions for Pension Plan Actuarial Valuations, names two key components of a best estimate mortality assumption: a base mortality table at the valuation date and a future mortality improvement scale.
  • Following publication of the Research Report, the committee believes that at the current time it may be appropriate to use any of the MI-2017 scale, the CPM-B scale or the proposed mortality projection scale published in the Research Report, subject to the considerations in Section 2.

2 Considerations in selection of mortality improvement assumption

  • The CPM-B scale has improvement rates by age and year for years up to 2030 and ultimate rates for all years after 2030; MI-2017 has ultimate rates after 2033 for ages 60 and up. Both will transition from two-dimensional to one-dimensional scales as valuation dates approach those years.
  • The ultimate improvement rates in CPM-B and MI-2017 rely heavily on expert judgment; those proposed in the Research Report are more substantially informed by stochastic mortality models fitted to mortality data.
  • The CIA was then reviewing and updating the Canadian Pensioners' Mortality tables, so the actuary may wish to consider the interaction of the base mortality and mortality improvement assumptions.
  • Paragraphs 1140.05 and 1620.16 of the Standards of Practice recognize a reasonable range of assumptions; the Research Report concludes that best-estimate results for long-term improvement rates have a standard error of around 0.5%.

Related readings

  • Mortality Improvements Research (CIA Report - 2024) — the research report this supplement comments on

Sources