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Life expectancy increases
It’s official: teachers are living longer. New mortality studies show the average female teacher retiring today can expect to live until age 90, three years longer than the average male teacher at retirement.
While longer life expectancy is good news for teachers, it creates growing funding challenges for the pension plan.
The table below shows how longevity has impacted the cost of future pensions for each funding valuation filed since the pension plan became an independent entity in 1990. Future pensions cost 9% more today than they did in 1993 due to increased life expectancy.
 |
Valuation
Year |
|
Life Expectancy
Retired Males |
|
Life Expectancy
Retired Females |
|
Cost of Pension* |
|
|
|
|
|
|
|
|
|
|
| |
1993 |
|
24 years |
|
28 years |
|
$776,000 |
|
| |
1996 |
|
24 years |
|
29 years |
|
$784,000 |
|
| |
1998 |
|
24 years |
|
29 years |
|
$784,000 |
|
| |
1999 |
|
24 years |
|
29 years |
|
$784,000 |
|
| |
2000 |
|
24 years |
|
29 years |
|
$784,000 |
|
| |
2001 |
|
25 years |
|
29 years |
|
$788,000 |
|
| |
2002 |
|
28 years |
|
30 years |
|
$806,000 |
|
| |
2003 |
|
28 years |
|
30 years |
|
$807,000 |
|
| |
2005 |
|
28 years |
|
30 years |
|
$811,000 |
|
| |
2008** |
|
30 years |
|
33 years |
|
$845,000 |
|
*Costs and average life expectancy reflect plan experience from 1993 to 2008 and are based on:
$40,000 starting pension at age 57; 2.2% inflation rate; and a 2.95% assumed real rate
of return on investments.
**Preliminary valuation results incorporate strengthened mortality assumptions recommended
in an independent review of the plan’s assumptions. |
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