Mortality Assumption for Actuarial Equivalence

What is your usual post-retirement mortality assumption for actuarial equivalence?

With the PPA restatements upon us, our company, like I suspect many of you, are re-evaluating our default selections for plan provisions. In the past we'd been using the 94 GAR table projected to 2002 with a 50/50 male/female blend. I'm wondering if it is reasonable to update this assumption, given that the base data is now quite old. On the other hand, for our clients, who are mostly small cash balance plans that pay out almost entirely lump sums, the definition of actuarial equivalence is immaterial, so why change something that isn't broken?

There are always design nuances. If goal is to maximize distributions under 415 then applicable mortality at 5% pre and post will do it. If one designs to actuarial tools made available to them then maybe a floating mortality table can't be accomodated. Etc., etc.

Mike,

Thanks for the reply. We have worked on plans which use the current applicable table, but for CB plans especially I prefer to use a static table to avoid the situation where a participant does not earn a pay credit during a year and then their annuity benefit is smaller compared to the previous year due to the mortality improvement. Do you (or anyone) have any thoughts on a modern, static, unisex mortality table?

I would use he most recent applicable table at the time.

Be careful of 411(d)(6).  Changing actuarial equivalences may be problematic since they are a right and feature of the benefit when it was earned.  Therefore, all optional forms must be protected.