U.S. Pension Plan Funding Status Plunges in October, According to BNY Mellon Asset Management
November 06 2008 - 9:25AM
PR Newswire (US)
Challenging Month for Stocks Sinks Value of Assets PITTSBURGH, Nov.
6 /PRNewswire-FirstCall/ -- Funding ratios at the typical U.S.
corporate pension plan fell 3.7 percentage points in October as
stocks had their worst month since 1987, according to BNY Mellon
Asset Management. For the year to date, funding ratios for typical
plans have declined approximately 7.7 percent. "Renewed recession
fears weakened an already fragile market, as the value of the
assets in a moderate-risk portfolio declined 11.8 percentage points
in October," said Peter Austin, executive director of BNY Mellon
Pension Services. "The impact of this dramatic drop in asset values
was partially offset by a 7.3 percentage point drop in typical plan
liabilities, as the Pension Protection Act average discount rates
rose 76 basis points." "This was the largest decline in funded
status for a single month since we started tracking pension funding
in March 2005," Austin added. "The picture would have been worse if
equities hadn't rallied during the last week of October. We are
watching corporate spreads very closely as they remain near
all-time levels. It is inevitable that corporate spreads will
narrow. The critical question is whether equity values will keep
pace with the expected increase in plan liabilities. Plan sponsors
need to be vigilant in monitoring their pension funding as we
expect more volatility in the near term." The Bank of New York
Mellon Corporation 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. The
company 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 more than $22.4
trillion in assets under custody and administration, approximately
$1.1 trillion in assets under management and services $12 trillion
in outstanding debt. Additional information is available at
bnymellon.com. DATASOURCE: The Bank of New York Mellon Corporation
CONTACT: Mike Dunn of The Bank of New York Mellon Corporation,
+1-212-922-7859, Web Site: http://www.bnymellon.com/
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