Americans Are Dying Younger, Saving Corporations Billions (bloomberg.com)

An anonymous reader quotes a report from Bloomberg: Steady improvements in American life expectancy have stalled, and more Americans are dying at younger ages. But for companies straining under the burden of their pension obligations, the distressing trend could have a grim upside: If people don't end up living as long as they were projected to just a few years ago, their employers ultimately won't have to pay them as much in pension and other lifelong retirement benefits. In 2015, the American death rate -- the age-adjusted share of Americans dying -- rose slightly for the first time since 1999. And over the last two years, at least 12 large companies, from Verizon to General Motors, have said recent slips in mortality improvement have led them to reduce their estimates for how much they could owe retirees by upward of a combined $9.7 billion, according to a Bloomberg analysis of company filings. "Revised assumptions indicating a shortened longevity," for instance, led Lockheed Martin to adjust its estimated retirement obligations downward by a total of about $1.6 billion for 2015 and 2016, it said in its most recent annual report.

Mortality trends are only a small piece of the calculation companies make when estimating what they'll owe retirees, and indeed, other factors actually led Lockheed's pension obligations to rise last year. Variables such as asset returns, salary levels, and health care costs can cause big swings in what companies expect to pay retirees. The fact that people are dying slightly younger won't cure corporate America's pension woes -- but the fact that companies are taking it into account shows just how serious the shift in America's mortality trends is.

Comments

Nice healthcare

[Billly Gates]

These so called evil socialist countries meanwhile laugh at us while their death ages grow and do not worry about losing their retirement over a medical issue

Re:Nice healthcare

[alvinrod]

Those so called evil socialist countries don't have America's terribly unhealthy population. Compare the U.S. against any of those so called evil socialist countries people would want to live in (i.e. Sweden, not Venezuela) and they typically have lower rates of obesity, tobacco, alcohol, and hard drug consumption. Saddle them with an equal number of your average 'Murican and their system would hopelessly buckle much like the knees of the obese Walmart shopper under the added burden of a sixth 40-count box of twinkies.

You could maybe argue that if the U.S. had some form of free healthcare it might not get to that point, but a lot of those same people are the kind of nutters that think the government put fluoride in the water to control people's minds and wouldn't go to some free government clinic for checkups. That and it would probably take away from their time of complaining to each other about evil socialized medicine and the government trying to take away their Medicaid.

Re:Nice healthcare

[rtb61]

Universal health means principles of preventative health care https://en.wikipedia.org/wiki/..., are applied by government upon a national basis and there is greater incentive for the government to ensure a healthy environment and more effective system of social welfare to ensure a healthier status upon average is maintained. A for profit system, means, once the user is bankrupt, there is no profit in providing health care, well, excluding overloading them with debt, to seize any remaining assets post death, from lack of health service and medication.

The reason why people are healthier in universal health care countries, is the government has an incentive to keep them that way because it is much cheaper. The reason why people are sicker if for profit health care nations because everyone has an incentive to keep the sicker to extract more profits out of them before they die.

Kinda makes me wonder

[jenningsthecat]

The conspiracy theorist in me can't help but think about all the pressure to cut healthcare costs, and about food corporations pushing high-carb, high-sugar foods, and the entertainment industry with all its incentives to become a couch potato. Corporations get to increase profits in the short term, and reduce costs in the long term when people die prematurely. No, there's probably not a conspiracy per se, but it may not be entirely a coincidence either.

Re:Kinda makes me wonder

[ChrisMaple]

...nobody wants to go first and make healthy food...

Are you truly trying to be a jerk, or have you never been to a grocery store? There are lots of healthy foods available, and many stores work hard to supply new items in the form of exotic fruits and vegetables.

The problem is not what's available, the problem is what people buy. Convenience foods and junk foods are popular, and you can't reasonably expect food stores to stop selling them just because they're harmful when eaten in excess. People need to exercise responsibility; this has been true for millennia. Your approach, using the threat of government guns against manufacturers, is tyranny.

Re:Kinda makes me wonder

[sjames]

If it's so inefficient, why is it that it costs half as much as American healthcare and achieves better results?

Profits are great

[youngone]

But for companies straining under the burden of their pension obligations...

I have no idea what the pension obligations are for the massive multinational I work for, but I do know profit was up nearly 7% to US$14 billion in the last year, so I don't think straining is quite the right word.

Pensions?

[DogDude]

What pensions? What companies still give pensions? I'm not aware of any US companies that give pensions.

Re: Pensions?

[Anonymous Coward]

You're a fucking idiot! A 401(k) is not a fucking pension; it is a retirement account. The 401(k) was designed to bolster your Social security and your company pension so you have three legs to stand on in your retirement. Congress has chosen to steal from the Social Security fund and not return the money thereby making Social security insolvent sometime in the near future. In addition, companies have decided to renege on pensions or not give them at all in favor of profits and salaries for CEOs so now Americans are left with only one leg to stand on: the 401(k). To call that a pension is just showing your ignorance and that's why I called you a fucking idiot. I'm done now.

Re:Pensions?

[apoc.famine]

You seem to have a very isolationist view of the world.
 
Why does my organization still offer a pension? Because everyone gets in on it, from the secretaries up to the C* positions, and you get out what you put in + matching and interest, with the only variance being when you snuff it. Given the topic of the article here, companies saving because lifespan increases are stalling, that should make pensions even more solvent. If the whole organization can benefit from a pooled investment, why shouldn't they? Why on earth would you rather lone-wolf it and do your own financial planning? It's like self-insuring your house and your car. If you're stupidly rich or love to take life-crushing risks, sure, makes sense. But for everyone else, safety in numbers.
 
Pensions are a way for a company to show that they are invested in their employees. That they want loyalty to the company, and are willing to pay for it. Not a bad thing, if they're run honestly and well. They're a financial instrument with well understood risks, and those risks can be managed pretty well.
 
Mine is well distributed between stocks, bonds, and other long-term, stable investment instruments. As employees get older, their share is moved into the more stable instruments. New employees get a larger share of the stocks, with the assumption that they can ride out some ups and downs, and make some real gains before retirement. What this means is that there's no "oh shit we're out of money" for retirees - their money is safely tied away in the bond markets. No, it's not going to grow much, but it doesn't have to. Younger employees get more of the risk, and if you don't make 5 years to get vested, you get your money back. Likely it's going to be a good premium on what you put in, unless you are unlucky and hit a downturn in the market.

Why do you deserve a lifetime of payments that you didn't really earn?

That doesn't make a whole lot of sense. If I worked just 5 years to get vested, quit, and put no more money in, at 65 I could pull something like $200/month in pension. That's matching plus interest, stock gains, etc. If you work for 30 years and contribute, that's more like $3-5k/month. You get out what you put in. It's not the gravy train for the rest of your life, regardless of what you contributed. What you can withdraw is carefully calculated based on how much you contributed, when you retired, and how long you're expected to live. It works like insurance - insurance rates are set based on how likely it is that you'll need them to pay for something, how much it will cost, and how many people are paying into the insurance pool. Here, we're underwriting loyal employee retirements as thanks for their service, rather than forcing them to take individual risks.

There's still a lot left over

[rsilvergun]

that they haven't managed to gut by closing down the company (Hostess, I'm lookin' at you). It's a lot of money somebody else is going to pocket.

I'm looking forward to them going after the VA & Military pensions. It'll work too. They'll pit the current enlisted folks against the new folks just like they did with the old and new employees.

Re:Why Have Fixed Benefits for Life? Lifelong = du

[mark_reh]

And no one's 401K or IRA ever ran dry before they died...

And if your's did dry up, you'd have only yourself or the thieving financial engineers on Wall Street, who spend their careers figuring out legal ways to steal everyone's money, to blame.

People have figured out that actively managed funds are a rip off, so now they pour money into index funds. The more money that goes into them, the more tempting a target they become. Some clever person at Goldman Sachs is going to figure out how to manipulate those funds to their benefit. It's coming. You'll see.

Re:Sweet news!

[ShanghaiBill]

If anything, it is less of a problem in America because very few corporations have defined benefit pensions anymore. If your 401k runs out before you die, that is your problem, not your employer's.

Re:Why Have Fixed Benefits for Life? Lifelong = du

[apoc.famine]

I would much prefer to decide how much to invest each year, and how to invest it, myself. Then I only have myself to blame if (when?) something goes wrong.

Because you are privileged to be intelligent, well educated, with adequate resources. If everyone was in that boat, it would be awesome. But not a lot of people are. We don't teach financial literacy in school. People get injured on the job, or get sick or injured without adequate health insurance. Boom, their entire ability to do what you're describing is gone. What then?
 
Part of the point of social security and disability is to ensure that these people don't end up dying in the street. Don't just skip from one ER to another running up huge costs. It's crazy, but paying for someone to have an apartment tends to cost less than them being homeless. Why? Because our emergency services are really expensive, because they are high-stress, require unique skills, and need to be available 24/7. Stick a homeless person in a house and have a councilor come over at 1pm every day, and they no longer tie up a couple of cops every few days. They don't end up needing an ambulance to come to a sketchy alley with police backup.
 
I get that social security seems like a really expensive thing, but homeless old people are way, way more expensive to deal with. Maybe you're in favor of just letting them die, but most of us realize that that's not a really good solution for many reasons. If we can't do that, then the next least expensive thing should be done. That's social security. (Well, social security and universal healthcare, but we're not quite there yet.)