Funding Status of U.S. Pensions Increases to 85.3 Percent in February, According to BNY Mellon Asset Management

Rise in U.S. Stocks Drives Improvement

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Mar 05, 2010, 08:20 ET

BOSTON, March 5 /PRNewswire-FirstCall/ -- Powered by a strong performance in U.S. stocks, the funding status of the typical U.S. corporate pension plan in February improved 1.6 percentage points to 85.3 percent, according to monthly figures published by BNY Mellon Asset Management.

Assets for the typical U.S. corporate pension plan increased 1.8 percent and liabilities decreased 0.1 percent for the month, as reported by the BNY Mellon Pension Summary Report for February 2010.

"A strong performance from U.S. stocks, particularly small cap and mid cap, boosted the assets of U.S. corporate pension plans," said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management. "Plans also benefited from a slight increase in the Aa corporate bond rate, which moved from 5.92 percent to 5.96 percent and resulted in a slight decrease in liability values."

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

"February was a good month as interest rates held steady during the equity market rally," said Austin. "We have experienced a nice recovery in funding levels over the last three months. But economic troubles in the European Union and the overwhelming scale of the U.S. deficit reinforce the work ahead, which will likely result in ongoing pension funded status volatility. We continue to see significant interest in liability driven investing (LDI) from plans looking to limit their exposure to volatility."

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 the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 34 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 $22.3 trillion in assets under custody and administration, $1.1 trillion in assets under management, services $12.0 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. Additional information is available at www.bnymellon.com.

All information source BNY Mellon Asset Management as at December 31, 2009. 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. A BNY Mellon Company(SM)

SOURCE BNY Mellon