Funded Status of U.S. Corporate Pensions Remains Flat in August, at 78.8 Percent, According to BNY Mellon Fiduciary Solutions' Monthly Institutional Scorecard

Slight rise in assets was offset by a similar increase in liabilities for corporate plan sponsors

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Sep 15, 2016, 03:30 ET

NEW YORK, Sept. 15, 2016 /PRNewswire/ -- According to the BNY Mellon Institutional Scorecard, which is available online here, the funded status of typical U.S. corporate defined benefit (DB) plans remained flat in August, at 78.8 percent. While corporate plan sponsors did see a small return on assets, up 0.1 percent in August, the gain was offset by a similar rise in liabilities—up 0.2 percent over the course of the month. Assets are now up 10.1 percent year-to-date, but remain behind liabilities, which are up 16.6 percent year-to-date.

The funded status of typical corporate DB plans did rise as high as 79.6 percent in early August, but slid back to 78.8 percent by the end of the month. Corporate discount rates continued to yield 3.5 percent in August, and have remained flat since the end of July. According to BNY Mellon estimates, the S&P 500 pension deficit is also now estimated to have increased by roughly $2 billion, to $491 billion.

"Relatively speaking, August wasn't a particularly eventful month in capital markets, as asset returns remained mostly flat," said Andrew Wozniak, Head of Fiduciary Solutions for BNY Mellon Investment Management. "As the summer comes to a close, investors are now turning their attention toward the U.S. Federal Reserve to look for clues surrounding another potential interest rate hike in 2016."

On the public DB side, the typical plan fell short of its monthly return target of excess returns over a 7.5 percent annual return by 0.5 percent, as assets gained only 0.1 percent in August. Even with this miss, typical public DB plans have still performed well in 2016. They are ahead of their year-to-date return target by 2.1 percent, and are now only 35 basis points behind their 12-month return target. Private Equity assets and High Yield Fixed Income assets were bright spots for typical public DB plan sponsors, as they returned 1.9 and 2.1 percent, respectively.

Endowments & foundations also fell short of their monthly target of real return in excess of inflation and 5 percent spending by 0.6 percent in August. Exposure to Emerging Market Equities helped to keep endowments & foundations close to their monthly return target, as the asset class returned 2.5 percent in August. Exposure to REITS was a notable laggard for endowments & foundations, falling 3.2 percent in August.

Despite their monthly return target, typical endowments & foundations are still ahead of their year-to-date return target by 2.4 percent, but are short of their one-year target by 0.1 percent.

Of the other asset classes the scorecard tracks, Global Fixed Income and Hedge Funds were laggards for investors in August, losing 0.5 and 0.2 percent, respectively. Small Cap Equities were up 1.8 percent, Emerging Market Debt was up 1.3 percent, and International Equities were up 0.6 percent.

Notes to Editors:

BNY Mellon Fiduciary Solutions is a division of The Bank of New York Mellon.

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, 2016, BNY Mellon had $29.5 trillion in assets under custody and/or administration, and $1.7 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). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

All information source BNY Mellon as of June 30, 2016. 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.

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SOURCE BNY Mellon