Research Report

International research on the treatment of mortality rates in International
Accounting Standard 19 (IAS 19 Employee Benefits)

This is an English translation of the summary portion of “国際会計基準 19 号
（IAS19、被用者給付（Employee Benefits））における死亡率の取扱いに関する国際調査.” The original was issued in Japanese.

December 2012

The Japanese Society of Certified Pension Actuaries

Preface
This Report summarizes the results of the research regarding the treatment of mortality rates
under the International Accounting Standard 19 (IAS 19 Employee Benefits), covering 27 countries
or regions including Japan.
IAS 19 was amended on June 16, 2011 to provide clarity with regard to the expected future
improvements of mortality rates into the measurement of defined benefit obligations and costs. In
response, the Japanese Society of Certified Pension Actuaries launched the Mortality Subcommitteeof the Accounting Standards Committee in August 2011 and embarked on a study of mortality rates
and their expected improvements.
While the Japanese Accounting Standard of Post-employment Benefits was subsequently
amended on May 17, 2012 with the intent of converging with IAS 19, the expectation of future
improvements in mortality rates was not clearly incorporated into the amendment. This is because
mortality rates have a relatively small influence on many of Japan‟s Defined Benefit Plans, and not
many companies have yet incorporated considerations around expected improvements in mortality
rates. Hence, the view that Japan has not yet reached a stage where the expected improvements ofmortality rates should be incorporated may have had an impact on this not being clearly
incorporated into the amendment. Although IAS19 was amended, the application of IFRS remains
optional for Japanese corporations at present. No strong indicators that Japanese companies areshowing an increased interest in incorporating the expectation of improvements in mortality rates
have been noted. While the overall intention of amending the Japanese Accounting Standard for
Post-employment Benefits was to converge with IAS 19, it cannot be concluded that incorporating
the expected improvements of mortality rates would have only a minor influence on life annuity
pensions. Further, although the application of IFRS is presently optional, it is considered likely thatas IFRS continues to be adopted in Japan, interest in mortality rate improvements will also
gradually increase in the future.
The Mortality Subcommittee conducted, as one of its projects, international research through theinternational networks of the Big Four accounting firms. This Report summarizes the results of thisresearch.
This research was made possible thanks to the input of a number of contributors. A special
mention of appreciation for the input of Takuma Fukuhara should be made for his support of thisresearch initiative through the meetings of the Subcommittee, leadership in coordinating fellow
Japanese Certified Pension Actuaries of Big Four member firms, and reporting the findings of thisresearch.
The research mainly focused on the methodology and background of mortality rates rather than-1-the mortality tables themselves, as used in defined benefit accounting. Refer also to the useful
research on mortality tables conducted by the UK Actuarial Profession.
The research was conducted by sending a questionnaire and obtaining answers thereafter.
Additional questions were sometimes sent subsequently, depending on the answers. The people
who cooperated in conducting research in their respective countries and regions are listed on thefollowing pages. They are experts in this field at each member firm of the Big Four (Deloitte
Touche Tohmatsu (DTT), Ernst&Young (EY), KPMG and PricewaterhouseCoopers (PwC)). Notethat statistical support was not always provided and it is possible that inaccuracies may exist in our
responses. This Report was prepared for the purpose of providing an understanding of the current
international situation, in broad terms only.

Lastly, we thank the following contributors of research for the preparation of this Report.

Project members:
Yasuyuki Fujii

Ernst & Young ShinNihon LLC

Takuma Fukuhara

Ernst & Young Transaction Advisory Services Co., Ltd.

Yoshikazu Tanaka

Meiji Yasuda Life Insurance Company

Nobuyuki Nakagome

Mitsubishi UFJ Trust and Banking Corporation

Satoshi Nakano

Nippon Life Insurance Company

Cooperators in Japan who communicated with other member firms of the Big Four:
DTT

Akihiro Hotta (Deloitte Touche Tohmatsu LLC)EY

Takuma Fukuhara (Ernst & Young Transaction Advisory Services Co., Ltd.)KPMG

Takanobu Miwa (KPMG Azusa LLC)

PwC

Asahiro Kishimoto (PricewaterhouseCoopers Aarata)

Countries and regions where the research was conducted:
Europe and Africa (10)Austria, Belgium, France, Germany, Italy, the Netherlands, South Africa, Spain,
Switzerland and the UK.

Americas (4)Brazil, Canada, Chile and the USA-2-Asia and Oceania (13)Australia, China, Hong Kong, Indonesia, South Korea, Malaysia, New Zealand, thePhilippines, Singapore, Taiwan, Thailand, Vietnam and Japan

December 2012
Yasuyuki Fujii, Chairperson,
The Mortality Subcommittee of the Accounting Standards Committee,
The Japanese Society of Certified Pension Actuaries-3-

Table of contents
Chapter 1
Chapter 2
Chapter 3
Chapter 4

Outline of the research……………………………… 4
Summary …………………………………………… 9
Results of the research (by question)…………...…… 16
Results of the research (by country)………….……… 56

This English translation

does not include Chapters 3 and 4, though they exist

in the original Report in Japanese.

-4-Chapter 1 Outline of the Research
1. Timing of the research
The research was conducted from late November 2011 through May 2012.

2. Method of research
Research on mortality in each country or region was conducted through the networks of the Big
Four accounting firms (Deloitte Touche Tohmatsu (DDT), Ernst & Young (EY), KPMG andPricewaterhouseCoopers (PwC)). Specifically, request letters and research questionnaires were sentby e-mail to the offices of each country or region by Japanese certified pension actuaries belonging
to Big Four member firms in Japan. Further, additional questions were issued once the answers
were received to obtain clarification as necessary. The original request letter and researchquestionnaire are both presented on the following pages.

Cooperators in Japan who communicated with other member firms of the Big Four
DTT

EY

KPMG

PwC

Firm

Deloitte Touche
Tohmatsu LLC

Ernst & Young
Transaction
Advisory Services
Co., Ltd.

KPMG Azusa LLC

PricewaterhouseCo
opers Arata

Name

Akihiro Hotta

Takuma Fukuhara

Takanobu Miwa

Asahiro Kishimoto

-5-

-

Request letter

The Japanese Society of Certified Pension Actuaries
November 2011
Dear sir or madam
Study of the mortality assumptions used in the valuation of defined benefit obligations based on
IAS19
The Japanese Society of Certified Pension Actuaries is a professional organization consisting of
the certified pension actuaries in Japan. It engages in actuarial business activities in Japan,
including establishing practice standards, investigative research, education, and continuing
professional development.
http://www.jscpa.or.jp/
The amendments to IAS19 issued in June 2011 specified that expected changes in mortality
assumptions (such as expected mortality improvement) should be taken into consideration when
determining defined benefit obligations.
In Japan, since most defined benefit plans consist of lump sums, fixed-term annuities, or life
annuities with guarantee periods, the effects of changes in mortality are limited. Therefore,
mortality has not been considered to be an important assumption, and it has not been common toincorporate future improvement of mortality in valuations. However, even in Japan, in a plan
whose benefits are influenced by changes in mortality, there should be room for further
consideration about reasonably incorporating expected improvements in mortality.
The Society has commenced work on mortality improvements by launching the Mortality
Subcommittee. The Subcommittee wishes to study international experiences in considering thetreatment of mortality improvements. A questionnaire is being distributed to the Big 4
international professional services networks in accountancy.
Please fill in the attached questionnaire regarding the mortality assumptions in your country. It
would be appreciated if you could please reply by 31 Dec 2011. It is preferable but not requiredthat it be completed by an actuary. Answers only need be provided for portions that apply to yourcountry, and to the best of your knowledge.
We would like to focus our study more on methodologies and backgrounds than mortality rates
themselves, whereas the Actuarial Profession of the UK issued an excellent discussion paper
regarding its international comparative study of mortality tables for pension fund retirees, looking
at the results of these assumptions about the future direction of life expectancy and comparing
them across different countries.
http://www.actuaries.org.uk/research-and-resources/documents/second-international-comparativestudy-mortality-tables-pension-f-0
Our report will be translated into English and shared with you. Your answers to the survey will
not be simply included in the report as received from you; it is our plan to summarize answers per
country. You and your company name will be presented with gratitude as a cooperator in thereport.
Yours sincerely,
Yasuyuki Fujii
Chair, the Mortality Subcommittee of the Accounting Standards Committee of the JapaneseSociety of Certified Pension Actuaries
Cooperators: Takuma Fukuhara (Ernst & Young)Akihiro Hotta (Deloitte Touche Tohmatsu)
Asahiro Kishimoto (PricewaterhouseCoopers)
Takanobu Miwa (KPMG)-6-

- Research questionnaireCountry
Company nameRespondent name(s)Actuary? ( Y / N )E-mail address(es)Phone number(s)Question(1) Does your country have defined benefit plans, and if so, are mortality rates used to calculate
their DBO?
(2) If your country has DB plans, which type is most common: plans that are easily impacted bymortality rates (e.g., life annuity plans), plans that are not easily impacted by mortality rates (e.g.,
lump-sum plans), or other types of plans that fall somewhere in between? In the event that thelatter is most common, please describe the plan type.

(3) In your country, is it common practice to incorporate expected improvements into the mortality
rates used in DBO valuation?
(4) In the event that expected improvements in mortality are incorporated into the mortality rateused in DBO valuation, what was the driver behind incorporating them?
(5) Are future mortality rate estimates issued? If so, please provide the following information.
・Name of the organization that issues the rate estimates
・Portion of the population upon which the rate estimates are based・Basic principle behind the methodology used to estimate future mortality rates
・Specific age group upon which the rate estimates are based, if applicable
・Date of the census upon which the most recently issued mortality rate estimates are based・Frequency of the census and issuance of mortality rates(6) What is the relationship between the issued mortality rate estimates and the mortality rates
used in individual companies for DBO valuation purposes? For example, do any of the following
apply? If so, which method is most commonly used?
・Mortality rates are developed based on the company's (or industry's) experiential data.
・Issued mortality rate estimates are adapted in some way, taking into account the company's (orindustry's) experiential data.
→ What adaptations are made under what circumstances?
・Assuming future mortality improvements are taken into consideration, in the event that theissued mortality rate estimate period is finite, how are improvements subsequent to the final yearof said estimate period figured in?
・Issued mortality rate estimates are used as-is.

(7) Do mortality rates used for DBO valuation differ between periods during and after anindividual's employment?
(8) Please indicate the life expectancy of 65 year old males and females as calculated based oneach of the following.
・Total population census (please indicate the date of the latest census)
・Mortality rate used for DBO valuation (including whether or not future mortality improvements
have been taken into account, and if they have, the mortality rate for a 65 year old individual as of 1
January 2011)(9) Is the mortality rate used for DBO valuation the same as the mortality rates used for funding
purposes? If the two differ, please explain how.
(10) In the event that expected improvements in mortality are incorporated into the mortality rateused in DBO valuation, no matter what the methodology for incorporating the improved mortality,
we assume that the mortality table is a matrix comprised of age and years. If you use a different
method, please describe the basic concept behind it.

(11) What, if any, consideration has been given to taking action regarding mortality rates in
response to IAS19 amendments made in June 2011?
(12) In relation to mortality rates, what points are confirmed during audits?

-7-

Answer3. Countries where the research was conducted and respondents

Country / region

DTT

EY

KPMG

PwC

—

—

Europe and Africa
Austria—

Karin Kührer-Hugo

Belgium—

Martine Blockx

L. Botes

Franck ChevalierPascal Meslin

Erika Beng

Ludovic Rossiaud

Philipp Schoepffer

AndreasJohannlewelingFranceGermany
Italy
Netherlands

Anthony Pouzeaud

Peter Devlin—
Sebastiaan de
Leeuw den Bouter

Nicola Ciaraldi
Hans de Mik

MaaikeSchakenbos
South Africa—

Monique Mariamé—
Alexander van
Stee
Machiel Koper

James Chemirmir

—

—

Bernd
Hackenbroich—
Mischa Borst
Dirk-Symon
Siesling
Colin van Son
Nanie Rothman
Madri Jacobs

Spain

Rocío de Padura

EnriqueGarcía-Hidalgo

Ana del Solar

Marian Moreno

Pilar Checa
Switzerland

Björn Thijssen

Frank Meisinger—

Oliver Stoll
Andrea Rem

UK

Paul Yates

Christopher Bown

Alex Burton

Chris Haralambous
Boris Zlatopolsky

AmericasBrazil—Carla Abrantes

Canada—Uros Karadzic

Roberta Porcel———

Moira Graham
Chile

—

USA

Robert Maciejewski—
Art Conat

Hector BenaventeJames Kreamer-8-—
Cindy Fraterrigo

Country / region

DTT

EY

KPMG

PwC

Asia and Oceania
Australia

Peter Larsen—

Steven Wood

Jo-Anne Morgan

Diane Somerville
China

Warren Zhao

Hilda Tse

Bill Cheung

Xin Ying ChuaBill Cheung

Xin Ying Chua

MellinXin Ying Chua

Jin Kyu Kim

Xin Ying Chua

Nelson Huang
Hong Kong—

Hilda Tse
Nelson Huang

Indonesia
South Korea—
Byung Seop, Shim—
Kyeong-mun.kwak

Eun Kyung, Kang———Xin Ying ChuaCharles Hett

Steven Wood－

Christine Ormrod

Philippines

—

—

—

Xin Ying Chua

Singapore——

Lim Sio Hoon

Xin Ying Chua

Taiwan——Amanda Chien

Xin Ying Chua

Thailand—

Malaysia
New Zealand

Nonglak Pumnoi—

Xin Ying Chua

WarapornPrapasirikul
Piyarat Vudjakorn
Pentip Sirathanaran
Vietnam——*Countries in each region are listed in alphabetical order.

The project members prepared the answers for Japan.

-9-Tran Anh Quan—

Chapter 2 Summary
1.

Does your country have defined benefit plans, and if so, are mortality rates used to calculate
their DBO?
Of the 27 countries where the research was conducted, 26 countries other than Vietnam
answered that „they have DB plans and use mortality rates for the calculation of DBO.‟
Vietnam answered that the „DB plans are extremely rare in Vietnam.‟ (Since Vietnam
answered N/A to the other questions, it has been precluded from the summarization
hereinafter.)2.

Are your DB plans easily impacted by mortality rates?
-

7 countries (Germany, the Netherlands, South Africa, the UK, Brazil, Canada and China)
answered that „the life annuity is a popular benefit and there are often cases where DBplans are easily impacted by mortality rates.‟-

12 countries (Belgium, France, Italy, Spain, Australia, Hong Kong, South Korea, Malaysia,
the Philippines, Singapore, Taiwan and Thailand) answered that „the lump-sum is a
popular benefit.‟-

7 countries (Austria, Switzerland, Chile, the USA, Indonesia, New Zealand and Japan)
answered that „both the life annuity and lump-sum are popular benefits.‟

3.

Is it common practice to incorporate expected improvements into the mortality rates used in
DBO valuation?
-

9 countries (Austria, France, Germany, the Netherlands, Spain, the UK, Canada, Chile andthe USA) answered that „it is common to incorporate expected improvements of mortality
rates.‟ However, France also replied that „expected improvements of mortality rates are
not incorporated into the lump-sum plan which is not significantly impacted by mortality
rates.‟-

Switzerland answered that „it is currently common not to incorporate expected
improvements but it is expected that incorporation thereof will increase going forward.‟-

4 countries (South Africa, Australia, Hong Kong and New Zealand) gave both answers
that „they incorporate expected improvements of mortality rates‟ and „they do notincorporate them.‟-

3 countries (Belgium, Italy and Switzerland) answered that „while expected improvements
of mortality rates are not normally incorporated, improvements of mortality rates from thebase date of the mortality rate until the base date of calculating obligations areincorporated.‟- 10 -

-

10 countries (Brazil, China, Indonesia, South Korea, Malaysia, the Philippines, Singapore,
Taiwan, Thailand and Japan) answered that „improvements of mortality rates are notnormally incorporated.‟

4.

What was the driver behind incorporating expected improvements?
-

13 countries (Austria, Belgium, France, Germany, Italy, the Netherlands, South Africa,
Spain, Switzerland, the UK, Australia, Hong Kong and New Zealand) answered that the„average life expectancy is extending‟ or „improvements of mortality rates are advancing.‟-

3 countries (the Netherlands, the UK and the USA) answered that „we are required toincorporate expected improvements of mortality rates in pension financing.‟-

The USA answered that the „Actuarial Standards Board requires us to incorporate
expected improvements of mortality rates.‟-

Canada answered that „expected improvements are included in mortality rates prescribedby the Canadian Institute of Actuaries (CIA).‟-

Switzerland answered that the „way of thinking about setting of mortality rates has been
made clear by the amendments of IAS 19.‟-

Australia answered that the „Institute of Actuaries of Australia encourages us to consider
improvements of mortality rates.‟-

11 countries (Brazil, Chile, China, Indonesia, South Korea, Malaysia, the Philippines,
Singapore, Taiwan, Thailand and Japan) answered „N/A.‟

5.

Are future mortality rate estimates released?
-

20 countries (Austria, Belgium, France, Germany, Italy, the Netherlands, South Africa,
Spain, Switzerland, the UK, Brazil, Canada, the USA, Australia, Hong Kong, Indonesia,
South Korea, New Zealand, Taiwan and Japan) answered that the „future estimation ofmortality rates has been released.‟-

The UK answered that the „forecasting model of improvement rates of mortality rates has
been made public.‟-

5 countries (China, Malaysia, the Philippines, Singapore and Thailand) answered that the„future estimation of mortality rates has not been released.‟-

One country (Chile) answered „N/A.‟(1) If future mortality rate estimates have been released, what organization releases them?
-

14 countries (Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, the UK,
Brazil, Australia, Hong Kong, South Korea, New Zealand and Japan) answered that a„government agency releases them.‟- 11 -

-

4 countries (the Netherlands, Indonesia, South Korea and Taiwan) answered the„Insurance Association has made them public.‟-

7 countries (France, the Netherlands, South Africa, Spain, the UK, Canada and the USA)answered that the Institute of Actuaries makes them public.‟ However, Canada replied that
Canada uses the mortality rates made public by the U.S. Society of Actuaries instead of its
own Institute of Actuaries.

-

Two countries (Germany and Switzerland) answered that a „private company makes thempublic.‟(2) If they have been released, what is the population subject to future estimation of mortality
rates?
-

11 countries (Austria, France, Germany, Italy, the Netherlands, Spain, the UK, Brazil,
Australia, Hong Kong and Japan) answered that the „population subject to future
estimation made public is all the people of the country or data of all residents.‟-

The UK answered that it is based on the „data from life insurance companies and thosefrom occupational pension schemes.‟-

The USA answered that it is based on „data from pension scheme members, pensioners
and also from the Social Security data.‟-

Germany answered that the „population subject to future estimation made public is basedon Social Security System data.‟

6.

What is the relationship between the issued mortality rate estimates and the mortality rates
used for DBO calculation purposes?
(Note that the mortality rates described below may be different from those cited in the
Question 5.)-

18 countries (Austria, France, Germany, Italy, Spain, Switzerland, Canada, Chile, the USA,
China, Hong Kong, South Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand
and Japan) answered that the „mortality rates released are normally used as they arewithout any adjustments.‟Italy responded that with regard to plans that are easily impacted by mortality
rates, for those mortality rates with improvements from the census base date up
to the base date of DBO valuation, there are cases where a certain percentage(e.g., 30% or -30%) is added/decreased to/from mortality rates made public toreflect the population subject to DBO calculation.



Canada answered that when actual mortality rates are lower (higher) than thosepresented in the UP94, there may be cases where a multiplying factor (e.g., 85%,
- 12 -

110%) is multiplied against the mortality rates.
A respondent from the USA answered, as a personal view, that in the case wherethe „number of pensioners is 2,000 or more or the number of active members is
50,000 or more‟ or „typically the number of members is 3,000 or more,‟ there arecases where mortality rates are calculated.

-

6 countries (Belgium, the Netherlands, South Africa, the UK, Australia and New Zealand)answered that „they are normally using what is arrived at by making adjustments to themortality rates released.‟

In Belgium, the answer given was that there are a number of adjustments byage shift (from three years to five years) in order to incorporate improvementsfrom the date of researching the underlying mortality until the base date of
DBO valuation.

In the Netherlands, most corporations refer to external data (e.g., experience
data of corporate pension contracts) when making adjustments. It was notedthat cases where adjustments are made based on a corporate‟s own experience
are extremely rare.

In South Africa, there are cases where a shift of age by one or two years isapplied to mortality rates to incorporate expected improvements. In addition,
there are also cases where a 1% improvement per year by each age isincorporated. As regards the latter, it was noted that improvements on or after
the base date of DBO valuation are not necessarily incorporated but there arealso cases where they are incorporated from the year earlier than that.



In the UK, since mortality rates of pension members are thought to be different
from general mortality rates, the mortality rates used are post-adjustment andinclude age shifting. However, it was noted that for very large plans (e.g.,
members of 10,000 or more), there are some cases where mortality rates areprepared in a unique manner by using the actual performance of the plan.



In Australia, it is common for adjustments to be made based on a corporate‟s
features and experience. It was noted that for plans with members of 1,000 or
more, there are some cases where mortality rates are calculated based on a
corporate‟s experience. Where expected improvements are reflected, it is done
via a shift of age or in the form of x% improvement per year. When x%
improvement is expected, the rates used are based on improvements over themost recent 25 years. In addition, it was noted that expected improvements are
not estimated for mortality rates of the current members but they are reflected
only for those of pensioners.
- 13 -

In New Zealand, it is common to make adjustments based on corporates‟features. There are many cases where adjustments based on improvements onor after the release date of mortality rates and corporates‟ features are made by
applying the table of mortality with a shift of ages. It was also noted that when
expected improvements are assumed, there may be some cases where they arereflected in the form of x% per year.

-

2 countries (Brazil and Indonesia) responded that „there is no relationship between
mortality rates used for DBO calculation and those released.‟7.

Do mortality rates differ between periods during and after an individual‟s employment?
-

7 countries (Austria, France, South Africa, the UK, Chile, Australia and New Zealand)answered that „they normally use different mortality rates.‟-

18 countries (Belgium, Germany, the Netherlands, Spain, Switzerland, Brazil, Canada, theUSA, China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore,
Taiwan, Thailand and Japan) answered that „they normally use the same mortality rates.‟-

8.

Italy answered that „it sometimes uses different mortality rates.‟

Life expectancy
While the standard for the answer varies according to respondents because mortality rates usedfor DBO calculation are not always the same according to country and there may be adifference in the method to calculate the life expectancy, 15 countries (Austria, Belgium, Italy,
the Netherlands, Spain, Switzerland, the UK, Brazil, Chile, the USA, Hong Kong, South
Korea, Malaysia, Thailand and Japan) answered that the „life expectancy of mortality rates
used for DBO calculation is longer than the mortality rates of the total population.‟ On thecontrary, 4 countries (France, Indonesia, New Zealand and Taiwan) gave some answers to theeffect that the „life expectancy of mortality rates used for DBO calculation is shorter than thatof mortality rates of the total population.‟ For instances where both „life expectancy in the caseof incorporating improvements‟ and „life expectancy in the case of not incorporating
improvements‟, the „life expectancy in the case of incorporating improvements‟ is by around
one to two years longer than the „life expectancy in the case of not incorporating
improvements.‟

9.

What is the difference between the mortality rates used for DBO valuation for accounting
purpose and the mortality rates used for funding purpose?
-

21 countries (Italy, the Netherlands, South Africa, Spain, Switzerland, Brazil, Canada,
Chile, the USA, Australia, China, Hong Kong, Indonesia, South Korea, Malaysia, New- 14 -

Zealand, the Philippines, Singapore, Taiwan, Thailand and Japan) answered that „they areusually the same.‟-

4 countries (Austria, Belgium, France and the UK) answered that „they are usually thesame‟ and „they are different from each other.‟

The UK also responded that „cases have increased where there are differences in
the actuarial assumptions used in the calculation of obligations based on thefunding standards which are regarded as prudent and actuarial assumptions forcalculation of DBO which are regarded as the best estimation.‟-

Germany answered that „in the case of external funding, more cautious mortality rates areused.‟

10. What is the method to incorporate expected improvements? Are there any approximatedapproaches other than the matrix?
-

14 countries (Austria, France, Germany, the Netherlands, South Africa, Spain, Switzerland,
the UK, Canada, Chile, the USA, Australia, Hong Kong and New Zealand) answered that„they normally incorporate expected improvements of mortality rates by using a matrix
table by age by gender and by year.‟

In the Netherlands, calculations are made by using a matrix table. It was notedthat „there are cases where some companies reflect expected improvements byusing the approximated approach.‟ The mortality rates by generation per thematrix table are identical to those used. Another respondent answered that „there
are examples where the mortality rates of the calendar year 2033 and those of thecalendar year 2035 are used for men and women respectively as an
approximation of mortality rates in which expected improvements are estimatedby the Actuarial Association of the Netherlands,‟ which is considered an example
where the approximated approach above was used.



Although at one time in the UK, simplified approximated approaches such as“Calendar year approximation,” “Year of birth approximation,” etc. were used,
DBOs are currently valued using methods that are unapproximated methods (amortality table which is a matrix comprised of age and calendar years) in 90% or
more.



In Canada, DBOs are calculated by using a matrix comprised of age and calendar
years. There was an answer that „Scale AA is used to reflect improvements untila specific calendar year (e.g., 2020) or improvements in all the future calendar
years.‟

In the USA, one respondent noted that static mortality rates are used, which must- 15 -

be prepared for the IRS for funding purposes. (Mortality rates that estimate
expected improvements of 7 years for pensioners and 15 years for pension
members are released by SOA.) In addition, there was another answer that„expected improvements for a period within the duration of DBO areincorporated.‟-

12 countries (Belgium, Italy, Brazil, China, Indonesia, South Korea, Malaysia, thePhilippines, Singapore, Taiwan, Thailand and Japan) answered that „they do notincorporate expected improvements.‟

11. In response to IAS19 amendments made in June 2011, was a study of mortality rates made?
-20 countries (Belgium, France, Germany, Italy, the Netherlands, South Africa, Spain,
Switzerland, the UK, Brazil, Canada, the USA, Australia, China, Hong Kong, South
Korea, New Zealand, Singapore, Taiwan and Thailand) answered that „no study ofmortality rates was made in response to IAS19 amendments made in June 2011.‟-

5 countries (Austria, Chile, Indonesia, Malaysia and the Philippines) answered „N/A.‟-

Switzerland answered that „while no study has been made in response to IAS19
amendments, it is thought that mortality rates by generation reflecting expected
improvements will be increasingly used.‟-

The USA answered that „instead of a response to IAS19 amendments, a study on mortality
rates is being conducted at SOA.‟*Mortality project at SOA
On March 19, 2012, the SOA publicly presented an exposure draft on mortality
improvement rates. Scale BB was presented as a new mortality improvement model tobe used temporarily until the succeeding model Scale AA is released. The concept of
2D (two-dimensional) improvement rates that vary according to age and calendar years
by gender was introduced in the exposure draft.
-

In Japan, in response to IAS19 amendments made in June 2011, the Japanese Society ofCertified Pension Actuaries has commenced a study of mortality rates.

12. In relation to mortality rates, what points are checked during audits?
-

21 countries (Austria, France, Italy, the Netherlands, South Africa, Spain, Switzerland,Brazil, Canada, the USA, Australia, China, Hong Kong, Indonesia, South Korea, Malaysia,
the Philippines, Singapore, Taiwan, Thailand and Japan) gave an answer to the effect of„whether or not the latest updated mortality rates are used.‟- 16 -

-

6 countries (Germany, Indonesia, South Korea, Malaysia, the Philippines and Thailand)gave an answer to the effect of „whether or not the standard mortality rates are used. (Inthe case where adjustments were made to the standard mortality rates that are used, isthere any rationale for the adjustments?)‟-

14 countries (Italy, the Netherlands, Switzerland, the UK, Chile, the USA, Australia,
Indonesia, South Korea, Malaysia, New Zealand, the Philippines, Singapore and Thailand)gave an answer to the effect of „whether or not the mortality rates used conform to thecharacteristics of the plan (or the relevant corporation).‟-3 countries (the UK, the USA and New Zealand) gave an answer to the effect of „whether
the expected improvements reflected are appropriate or not.‟- 17 -