Funded Status of U.S. Pensions Rises to 80.5 Percent, According to BNY Mellon Asset Management

Funded Status Drifts Slightly Higher as Liabilities Fall

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Dec 07, 2010, 08:04 ET

BOSTON, Dec. 7, 2010 /PRNewswire-FirstCall/ -- Assets declined less than liabilities at the typical U.S. corporate pension plan in November resulting in a funded status of 80.5 percent, a slight improvement from the 80.3 percent funded status at the end of October, according to monthly statistics published by BNY Mellon Asset Management.

Assets for the typical plan declined 0.4 percent as a slight gain of 0.6 percent in the U.S. equity markets was offset by a drop of 4.8 percent in international stocks, according to the BNY Mellon Pension Summary Report for November 2010. The increase in the Aa corporate discount rate to 5.32 percent from 5.23 percent drove the typical plan's liabilities 0.7 percent lower during the month, the report said.

Plan liabilities are calculated using the yields of long-term investment grade corporate bonds. Higher yields on these bonds result in lower liabilities.

"We continue to move up from the nadir of funded status that was recorded at the end of August 2010, although we remain below the level that was reported at the beginning of this year," said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management. "The positive equity performances of the last three months and steadily rising interest rates have been a welcome change for plan sponsors. If these trends continue, we may see a recovery in funded status of the typical plan in excess of 10 percentage points for the last four months of the year."

Austin added, "While the markets remain concerned with weak economic activity and low interest rates, interest in programs that manage the impact of pension plan funding volatility continues to be very strong. Of particular note are solutions that enable sponsors to target a specific funding level by a set deadline. Should the equity markets continue their recovery with a complementary increase in interest rates, we expect a significant increase in enthusiasm for target date funding solutions."

Notes to Editors:

BNY Mellon Asset Management is the umbrella organization for BNY Mellon's affiliated investment management firms and global distribution companies.

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, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $24.4 trillion in assets under custody and administration and $1.14 trillion in assets under management, services $12.0 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available at www.bnymellon.com.

All information source BNY Mellon Asset Management as of September 30, 2010. 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 Asset 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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