August Rebound Takes Funded Status of U.S. Corporate Pensions off Record Low Level, According to BNY Mellon

Typical Plan Rises to 73.2 Percent as Liabilities Fall, Assets Rise

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Sep 06, 2012, 07:42 ET

NEW YORK, Sept. 6, 2012 /PRNewswire/ -- The funded status of the typical U.S. corporate pension plan in August increased 1.8 percentage points to 73.2 percent on a slight rise in both interest rates and asset values, taking the typical plan off the record low levels of July, according to BNY Mellon.

In August, the Aa corporate discount rate rose eight basis points to 3.72 percent, sending liabilities for the typical plan 0.9 percent lower, according to the BNY Mellon Pension Summary Report for August 2012. Plan liabilities are calculated using the yields of long-term investment grade bonds. Higher yields on these bonds result in lower liabilities.

The funded status also was helped by rising equities in the U.S. and international developed markets, which boosted assets by 1.5 percent in the typical plan, according to the August report.

"Plan sponsors saw some relief from the extraordinarily low interest rates as the benchmark rate for liabilities increased slightly," said Jeffrey B. Saef, managing director, BNY Mellon Asset Management, and head of the BNY Mellon Investment Strategy and Solutions Group. "The low interest rates have been the main reason for the 2.1 percentage point decline in funded status year-to-date despite respectable returns in the equities markets."

Notes to Editors:

The BNY Mellon Investment Strategy and Solutions Group is a division of The Bank of New York Mellon.

BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.3 trillion in assets under management. It encompasses BNY Mellon's affiliated investment management firms, wealth management services and global distribution companies. More information can be found at www.bnymellon.com.

BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, offering superior investment management and investment services through a worldwide client-focused team. It has $27.1 trillion in assets under custody and administration and $1.3 trillion in assets under management, services $11.5 trillion in outstanding debt and processes global payments averaging $1.4 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com or follow us on Twitter@BNYMellon.

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