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Plans Could Save Big with IRS Use of Existing Mortality Tables

Newer is not always better, and Moody’s Investor Service has provided fresh proof — at least for defined benefit plans. According to Pensions & Investments, a report Moody’s released Sept. 1 says that the IRS’ continued use of existing mortality tables could save DB plans $18 billion or more. But it will be a one-time savings, since the IRS is only putting off adoption of new tables until 2017.

In Notice 2015-53, issued July 31, the IRS announced the mortality tables for minimum funding and present value requirements for use in 2016. It said that it would continue to use the tables it had been using while it studied the updated figures the Society of Actuaries has prepared.

Moody’s contends that application of the new mortality tables will make pension obligations grow by $126 billion and will also make lump-sum payouts cost more. Moody’s says that allocating that figure over seven years would result in $18 billion of contributions being deferred until 2017.