US Workers Living Longer Is Bad News For Their Pension Funds
Men and women are living longer, and that’s a big problem for the corporate pension funds that support them.
The average 65-year-old man or woman can now expect to live about two years longer than expected in 2000, according to a new estimate by the nonprofit Society of Actuaries. A U.S. woman can expect to live to almost 89, and a U.S. man to about 87, reported The Wall Street Journal.
That’s two more years of pension funds, and represents about a 7 percent liability for most corporate plans, reported the WSJ. The Internal Revenue Service calculates the minimum funding requirements for corporate pensions and will take the new estimates into account in 2016.
Many of those pension funds are already struggling.
The combined deficits of the 100 largest corporate pension plans rose to $281 billion in August, reported the WSJ, up from $193.2 billion at the end of 2013 — in part because of a relatively weak stock market.
“Plan costs could rise simply because people are living longer,” Dale Hall, managing director of research for the Society of Actuaries, told the WSJ.
These new numbers could further encourage corporations to find ways to reduce the risk — some have already begun offering employees the ability to buy a lump-sum pension or work with insurance companies. In September, Motorola transferred $3.1 billion of risk and liability to Prudential, reported the WSJ, and may cut its obligations to employees by half.
Similar moves by other corporations are worrying some retirees, because their pensions are no longer insured by the federal government.
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact firstname.lastname@example.org.