Funded Status of U.S. Corporate Pensions Falls to 89.9 Percent, According to BNY Mellon ISSG

NEW YORK, Oct. 2, 2014 /PRNewswire/ -- Falling stock markets drove the funded status for the typical U.S. corporate pension plan to 89.9 percent in September, the lowest level since August 2013, as falling asset values also resulted in public plans, foundations and endowments missing their return targets, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG).  

The funded status of the typical U.S. corporate pension plan in September fell 0.2 percentage points, despite liabilities falling 2.6 percent, according to the BNY Mellon Institutional Scorecard. Assets for the corporate plans fell 2.7 percent, outpacing the fall in liabilities, ISSG said.

This funded status is now down 5.3 percent from the December 2013 high of 95.2 percent, according to the scorecard.

The lower liabilities for corporate plans in September resulted from the Aa corporate discount rate rising 20 basis points to 4.31 percent over the month.  Plan liabilities are calculated using the yields of long-term investment grade bonds.  Higher yields on these bonds result in lower liabilities. 

"After benefiting from the first monthly decline in liabilities of more than one percent since November 2013, pension plans still failed to improve their funded status," said Andrew D. Wozniak, head of fiduciary solutions, ISSG. "Although U.S. large cap equities outperformed the liabilities over the month, they were the only major equity class to do so. A sustained divergence between U.S. large cap equity returns and other public equity classes could continue the downward trend in funded status."

Public defined benefit plans in September fell short of their target by 3.5 percent as assets fell 2.9 percent, according to the monthly report.  Year over year, public plans have met their return of target of 7.5 percent, ISSG said.

For endowments and foundations, the real return in September was -3.6 percent, as assets declined 3.1 percent, ISSG said.   Private equity and real estate investment trusts, which comprise 15 percent and eight percent, respectively, of the asset portfolio, fell 5.5 percent and 6.3 percent, respectively, over the month. Year over year, foundations and endowments are behind their inflation plus spending target by 0.1 percent, ISSG said.

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 $1.6 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 investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of June 30, 2014, BNY Mellon had $28.5 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Learn more at www.bnymellon.com, or follow us on Twitter @BNYMellon.

All information source BNY Mellon as of June 30, 2014. This press release is qualified for issuance in the US only and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Investment Management to members of the financial press and media and the information contained herein should not be construed as investment advice.  Past performance is not a guide to future performance.  A BNY Mellon Company.

SOURCE BNY Mellon

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED