; FAQ 968: Mortality Tables - SOA Tables and Generational Mortality

FAQ 968: Mortality Tables - SOA Tables and Generational Mortality

Problem:

How can I apply the SOA and generational mortality projections to my valuation?


Solution:

Starting in 2014, the Society of Actuaries published mortality tables that include a generational mortality projection component. The system allows users to select these generational mortality tables in their calculations. The following is an overview of changes, beginning with the user update instructions, changes in Table Maintenance, followed by updates to the DB Plan Specifications.

User Update Instructions
From our Client Support Center Website > UPDATES & DOWNLOADS > ASC SYSTEM TABLES download and review the DB Tables - Generational Mortality Projection Documentation.pdf. This document provides detailed information about generational mortality projection scales and the base tables intended for use with the projection scales. This documentation has been updated to include the Pri-2012 Base Tables and the MP-2021 generational projection scales.

If you do not have specific base tables installed, download and review PPA Mortality Tables Import Instructions.pdf for instructions on downloading mortality tables.

Next, users will need to be current on all patches. Patch files include projection scales, including the two-dimensional (2-D) projection scales. The tables published by the SOA may be projected with either one-dimensional (1-D) or two-dimensional (2-D) projection scales. Review the SOA's reports regarding which mortality projection scale is appropriate to pair with specific base tables. An overview of where these scales appear in Table Maintenance is:

- 1-D
- These projection scales will be saved in Table Maintenance in the General \ Mortality section and the name of the scale table will begin with 'SC'. For example, SCAA M is the Scale AA projection factors for Males.

- 2-D
- These projection scales will be saved in Table Maintenance in the Defined Benefit \ Generational Mortality section and the name of the scale table will begin with 'MPyyyy'. For example, MP2021 M is the 2021 generational mortality projection table for Males.

Table Maintenance Updates
Before using a mortality table with a projection scale in the Calc of PV Factors function or the DB valuation system, users must enter the year of the mortality table in the 3rd line of the Table Description. The Description screen for mortality tables includes a reminder to enter the year of the mortality table as the first 4 characters of the 3rd description line (e.g. 2021). Many of the tables that ASC has available for download already include the year of the mortality table on the 3rd line of the Table Description, but we recommend verifying this is the case before using a table with 1-D or 2-D projection scales.

The Function \ Calc PV Factors includes a feature for users to determine a present value factor reflecting mortality projection scales entered in the Mortality Projection section of the screen. To calculate a PVF using mortality projection, follow these steps:
1) Select 1-D or 2-D in the Type field.
2) Select the projection scale in the Table field. For 1-D projections select from the tables that start with SC. The list of available 1-D projection scale tables can be seen in the General \ Mortality section. The list of available 2-D projection scale tables can be seen in the Defined Benefit \ Generational Mortality section.
3) Enter the 4-digit valuation year in the Val Year field.

The Function \ Commutation Functions includes a feature for users to generate a schedule of generational mortality improvement factors for up to 3 sample ages using the Base table and 2-D projection scale entered.

Plan Specification Updates
The option to use generational mortality projection is available in Projected Mortality frames for every screen that includes a mortality assumption in ASC. Mortality projections can be done on a 1-D or 2-D basis. If generational mortality is used it will be applied to both pre-retirement and post-retirement mortality rates.
The default for the Mortality Projection field is 0 - Static. If the Mortality Projection field is 1 - Generational or 2 - 2-D Generational then the drop-down menus for selecting projection scales in the Male and Female fields will be available.
To use the 1-D generational projection tables, enter a base table (e.g. RP2000CM and RP2000CF) in the Pre-Retirement and Post-Retirement Mortality fields. Select 1 - Generational in the Mortality Projection field and the appropriate projection scales (e.g. SCBBM and SCBBF) in the Male and Female projection scale fields.
To use the 2-D generational projection tables, enter the appropriate base tables in the Pre-Retirement Mortality and Post-retirement Mortality fields. Select 2 - 2-D Generational in the Mortality Projection field and the appropriate projection scales in the Male and Female projection scale fields.
Remember, the third line of the Mortality Table Description must have the year of the table coded in it in order for the calculations to run properly. In this example, in Table Maintenance, you would need to enter 2000 in the 3rd line of the Table Description of the RP2000CM and RP2000CF tables.

To summarize these instructions:
1. In Table Maintenance, verify the Base Year is coded on the 3rd line of the table description
2. In Plan Specifications, for the screens where you wish to use generational mortality projections, select the Base Tables for Pre-Retirement and Post-Retirement assumptions.
3. Select 1-D or 2-D in the Mortality Projection section.
4. Select the Male and Female Mortality Projection Scales.
5. Run Calculations> Valuation