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

Corporate Plans, Public Plans, Foundations and Endowments All Beat Targets in November

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Dec 03, 2014, 07:03 ET

NEW YORK, Dec. 3, 2014 /PRNewswire/ -- The funded status of the typical U.S. corporate pension plan increased 0.4 percentage points to 89.9 percent in November as assets increased faster than liabilities, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG).

Public defined benefit plans, endowments and foundations beat their targets in November on the strength of rising asset values, ISSG said.

For the typical corporate plan in November, assets increased 1.5 percent, outpacing the 1.1 percent increase in liabilities, according to the BNY Mellon Institutional Scorecard.

The funded status for the typical corporate plan is now down 5.3 percent from the December 2013 high of 95.2 percent, according to the scorecard.

ISSG attributed the higher assets for U.S. corporate and public plans in November to the improvement in U.S. large cap and international developed market equities, while endowments and foundations benefited from the performance of private equity and real estate investment trusts.

The higher liabilities for corporate plans in November resulted from the Aa corporate discount rate falling six basis points to 4.14 percent over the month. Plan liabilities are calculated using the yields of long-term investment grade bonds. Lower yields on these bonds result in higher liabilities.

"The rebound in funded status in November reversed the damage done in October," said Andrew D. Wozniak, head of fiduciary solutions, ISSG. "However, plan sponsors are bracing for changes in the way regulators view mortality assumptions used to value liabilities. These changes are likely to drive down the funded status for sponsors who will report earnings as of December 31, 2014."

Public defined benefit plans in November beat their targets by 0.7 percent as assets rose 1.3 percent, according to the monthly report. Year over year, public plans have underperformed their return target by 0.7 percent, ISSG said.

For endowments and foundations, the real return in November was 0.6 percent, as assets returned 1.0 percent, ISSG said. Year over year, endowments and foundations are behind their inflation plus spending target by 0.5 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 Sept. 30, 2014, BNY Mellon had $28.3 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). Additional information is available on www.bnymellon.com, or follow us on Twitter @BNYMellon.

All information source BNY Mellon as of September 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.

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