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Article | Global News Briefs

Germany: New demographic tables increase pension liabilities

Pensions Corporate Consulting|Retirement

August 9, 2018

In the new demographic tables Heubeck 2018 G, German mortality rates are much lower, potentially increasing pension liabilities.

Employer action code: Act

Heubeck AG, a national pension consulting firm, has released an update to its demographic tables (Heubeck 2018 G). The new tables reflect the latest statistics from the government retirement program and the Federal Statistical Office.

Key details

In comparison to the prior Heubeck 2005 G tables:

  • Mortality rates are lower (i.e., expected future lifetime is longer).
  • Both the likelihood of disability and mortality rates for disabled participants are lower.
  • For the first time, an adjustment to the mortality rates was made to help account for the dependence on the benefit level. Mortality rates, regardless of status or gender, were multiplied by an age dependent factor.
  • In addition to separate tables for men and women, a unisex table is also included, as is sometimes required for particular divorce settlement and portability cases.

Employer implications

International accounting

Under international accounting standards (both IFRS IAS 19 and U.S. GAAP ASC 715), actuarial assumptions, including mortality and disability, must be made on a “best estimate” basis. As the Heubeck 2005 G tables are used as the best available estimate for a plan’s demographic assumptions, in the absence of other evidence (e.g., plan specific experience analysis), the updated tables should most likely be adopted as the current best available estimates. For accounting purposes, there is no need to wait for official recognition from the Federal Ministry of Finance; therefore, it’s expected that the Heubeck 2018 G tables will be widely adopted for future international accounting purposes, including at December 31, 2018.

German accounting

For the German commercial balance sheet (HGB), probabilities of death and disability must be determined using recent observations and valid statistical methods; they can be taken from generally accepted tables.

Potential impact on accounting results

Heubeck AG provided an approximate estimate of the one-time increase in the HGB and international accounting (both IAS 19 and ASC 715) liability as between 1.0% and 2.0%. However, this is largely dependent on such factors as the discount rate, form of payment, plan benefit and population composition. Willis Towers Watson strongly recommends having a comparison valuation performed to determine the actual impact of the new demographic tables. For HGB, the one-time increase in liability is recognized immediately as an operating expense. For IAS 19, it creates a loss due to a demographic assumption change, which is not recognized in profit or loss, but directly in equity (via Other Comprehensive Income - OCI). Under ASC 715, the actuarial loss first enters accumulated OCI, and then is recycled through future profit or loss in accordance with the company’s accounting policies.


Heubeck AG estimated the increase in the liability for the German tax balance sheet to be between 0.5% and 1.2%, depending on the plan’s composition. The German Ministry of Finance (BMF) must approve the new Heubeck 2018 G tables’ use to calculate tax liability. It is highly likely that such approval will be published before December 31, 2018. Willis Towers Watson expects that a transitional period for the first application of the new mortality tables will be defined. According to § 6a (4) 2 of the German Income Tax Act (Einkommensteuergesetz or EStG), the increase in liability must be spread over at least three years.

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