Funding Status of U.S. Pension Plans Improves For Third Month in Row, According to BNY Mellon Asset Management
June 05 2009 - 9:15AM
PR Newswire (US)
Equity Returns Continue to Buoy Plans BOSTON, June 5
/PRNewswire-FirstCall/ -- A third consecutive month of strong
performances by global equities overcame an increase in pension
plan liabilities to lift the funded status of a typical U.S.
corporate pension plan by 0.6 percentage points in May, according
to monthly statistics published by BNY Mellon Asset Management. The
funded status of the typical plan has improved for three months in
a row. Assets for a typical moderate risk portfolio increased 4.1
percent, while liabilities rose 3.3 percent during the month. For
the year through May 31, the funding ratio for the typical plan is
now up 10.2 percentage points, as represented by the BNY Mellon
Pension Liability Index. "We have been anticipating a decline in
long Aa corporate bond yields for some time, and in May we began to
see a move in this direction," said Peter Austin, executive
director of BNY Mellon Pension Services, the pension services arm
of BNY Mellon Asset Management. "The 40 basis-point decline we
observed in May lowered the discount rate for these bonds to 6.85
percent and drove pension plan liabilities higher. We remain wary
of a continued decline in corporate bond yields, which would
further increase pension plan liabilities." Austin noted that
Standish Mellon Asset Management Company LLC, the fixed income
specialist for BNY Mellon Asset Management, continues to see
pension plans increase their allotments to long-term
investment-grade corporate bonds to protect themselves against the
risk of higher liabilities. "Plan sponsors are becoming more
knowledgeable of the opportunities available for protecting plan
funded status from changes in interest rates. For many plan
sponsors, long-term corporate bonds offer a very attractive
solution. We are also seeing increasing optimism among plan
sponsors that the equity market rally will continue, allowing
sponsors to recapture the funding lost so quickly during Q4 2008
and Q1 2009." Notes to Editors: BNY Mellon Asset Management is the
umbrella organization for The Bank of New York Mellon Corporation's
affiliated investment management firms and global distribution
companies. 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 $19.5 trillion in assets under custody and
administration, $881 billion in assets under management, services
more than $11 trillion in outstanding debt and processes global
payments averaging $1.8 trillion per day. Additional information is
available at http://www.bnymellon.com/. All information source BNY
Mellon Asset Management as at 31 March 2009, except where noted.
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 Bank of New
York Mellon Company 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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