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2014 Canadian pensioners' mortality tables

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FINANCIAL STATEMENT PREPARATION – WHICH MORTALITY ASSUMPTION IS APPROPRIATE?

In recent years, there have been significant changes related to the selection of mortality assumptions used in pension plan actuarial valuations. To help those involved in financial statement preparation, this article aims to shed light on the tables published in Canada and the selection of mortality assumptions in actuarial valuations for funding and accounting purposes. 

Published mortality tables

The Canadian Institute of Actuaries (CIA) published the first. Historically, the mortality tables used in Canada for actuarial valuations of pension plan obligations have been based on a U.S. population.

When selecting a mortality assumption for the valuation of a pension plan obligation, two key components should be considered, including:

  • current rates of mortality;
  • adjustments for future improvements in mortality.
Current mortality rates are generally based on published mortality tables, with (or without) adjustments to account for the credibility of plan experience or other factors. The following are the CIA’s most recent Canadian mortality tables published in 2014:

  • 2014 Mortality Table (CPM2014) developed from the combined experience exhibited under public and private sector plans; 
  • 2014 Public Sector Mortality Table (CPM2014Publ) based on the separate experience of public sector plans; 
  • 2014 Private Sector Mortality Table (CPM2014Priv) based on the separate experience of private sector plans.

In keeping with expected future improvements in mortality, the CIA also published in 2014 the CPM-B scale, a future mortality improvement scale to be applied to current mortality rates in the mortality tables in order to obtain the best estimate of future mortality. 

The CIA’s mortality study on Canadians that began a few years ago is still ongoing. To date, no new mortality tables have been published, but the CIA issued a new mortality improvement scale, the MI-2017 scale, in 2017. The CPM-B scale and MI-2017 scale are based on comparable data. The main difference between the two scales resides in the ultimate mortality improvement rate, which is a critical assumption in developing any mortality improvement scale. A higher ultimate mortality improvement rate assumption was considered in the development of MI-2017.

Actuarial valuations for funding purposes

The CIA also publishes an Educational Note for actuaries, which is updated regularly and intended to assist in selecting appropriate mortality assumptions in going concern actuarial valuations of pension plans for funding or accounting purposes when the actuary opines on the assumptions selected under the terms of the engagement. The Educational Note, which is titled Selection of Mortality Assumptions for Pension Plan Actuarial Valuations , was last revised in December 2017 and is available on the CIA website  [PDF].

If plan experience is not entirely credible, actuaries can reasonably use the CIA’s published mortality tables. For example, the Educational Note states that for a mid-size plan (i.e. approximately 1,000 to 10,000 retirees), it is very unlikely the mortality experience would be assessed to be fully statistically credible. Nevertheless, the note indicates that useful information may be derived and significant trends may be observed.


An actuary may consider adjusting the mortality rates in published tables for the following plan membership characteristics:

  • nature of employment;
  • industry; or
  • socio-economic indicators that have been demonstrated to be correlated with mortality levels (for example, pension size, place of residence and level of education).
Regarding the selection of the mortality improvement scale, the Educational Note states that it might be appropriate for actuaries to use the CPM-B or MI-2017 scale. In general, slightly higher obligations will arise from using the MI-2017 scale due to the higher ultimate mortality improvement rate considered in this scale.

Consequently, for pension plan valuations for funding purposes, actuaries responsible for selecting assumptions can generally be expected to use published tables, with or without adjustment factors, and a projection of mortality improvement based on CPM-B or MI-2017.

It should be noted that legislation requires actuaries to use the CPM-2014Publ table for actuarial valuations of municipal and university pension plans as part of a plan restructuring, taking into account limited adjustments to the table. For subsequent actuarial valuations, actuaries can select the assumption in the same way they would for another pension plan.

Actuarial valuations for accounting purposes

These tables, with or without adjustment factors, and the published mortality improvement scales will also likely be used for pension plan actuarial valuations for purposes of preparing the financial statements of plan sponsors or of the plans themselves. 

When producing these valuations, the person in charge of preparing financial statements (the plan sponsor or administrator) is responsible for selecting the assumptions based on applicable guidance set out in Canadian generally accepted accounting principles.

However, Canadian generally accepted accounting principles, regardless of the applicable accounting framework, specify that pension plan obligations must be based on best-estimate assumptions (or on the best estimate possible). In this regard, even if the CIA’s Educational Note is intended to assist actuaries in establishing best estimate mortality assumptions, it can also serve as an appropriate reference tool in financial statement preparation. 

If the mortality assumption selected by the entity differs from the CIA’s published tables, the auditor will have to ask management to demonstrate that it has used best-estimate assumptions based on actual credible plan experience, or any other relevant experience. The auditor will then have to assess this evidence with the assistance of an actuary, if needed.

Auditors should also watch for newly published mortality tables and mortality improvement scales following developments in CIA studies. If new tables and improvement scales are available after the actuarial valuation is performed, but before the financial statements are completed or authorized for issue, the auditor will need to assess the impact based on the standards dealing with subsequent events. 

The Order’s Sector-specific working group on pension plans

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