Report shows US life expectancy is falling short, and who is benefitting off it


The economic development curve isn’t exactly panning out the way capitalists from the mid twentieth century would have envisioned for the United States. While population has leveled off according to projections, life expectancy has stalled, but it is saving corporations billions.

Bloomberg reports that, in 2015, the age-adjusted share of US deaths rose slightly for the first time since 1999. The fall out has been that a reported 12 major corporations – from Verizon to General Motors – have said that due to the slip in mortality rate, they’ve decreased their pension estimates by as much as $9.7 billion.

“Revised assumptions indicating a shortened longevity,” lead to Lockheed Martin’s adjustment of its retirement obligations downward by about $1.6 billion for 2015-16. Bloomberg notes that healthcare costs, average asset returns, and salary levels are all additional factors in determining pension funds, but the fact that many large companies’ numbers are on a downward trend shows how significant the shift in mortality rate has been.

“Historically, mortality rates annually have tended to come down year-over-year,” says R. Dale Hall, managing director of research at the Society of Actuaries. “There really has been a little bit of slowdown in mortality improvement in the United States,” Hall says.

Such an abrupt halt after a remarkable ascent is troubling, especially for older Americans. In 1970, a 65-year-old could expect to live on average 15.2 years more. By 2010, that had skyrocketed to an average of 19 years more. From the years 2010 to 2015, however, only 4 months have been added on to that average.

Based on the improvements seen in the years 2000 to 2010, the Society of Actuaries updated its baseline mortality tables in an optimistic direction, which led to an increase in pension obligation estimates across the board. But in 2016, the society adjusted its numbers downward, lowering pension obligations by about 1.5 percent to 2 percent.

While mortality rates are determined by the entire population, pension funds reflect mostly life expectancy past retirement. But looking just at people over 65, the death rate worsened in 2015 for that group as well, according to a July report published by the Society of Actuaries.

“That’s actually rather remarkable,” says Eric Keener, senior partner and chief actuary at Aon’s U.S. retirement practice. “Even in the previous years, you’ve seen a slower degree of improvement for the pensioners, but you haven’t seen a decline in life expectancy.”

Keener’s conclusive thought is one all Americans are left wondering: If mortality improved by 1 percent a year for most of the past 70 years, might the U.S. revert to that soon? Or, as Keener asks, “Is this really a new reality that we’re living in?”

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