Stock Market Decline in October Trims Funding Status of U.S. Pensions, According to BNY Mellon Asset Management
November 04 2009 - 7:48AM
PR Newswire (US)
Funding Status of Typical Corporate Plan Dips Back Below 80 Percent
BOSTON, Nov. 4 /PRNewswire-FirstCall/ -- U.S. stocks declined for
the first time in eight months, driving down the funding status of
the typical U.S. corporate pension plan by 0.4 percentage points in
October, according to monthly figures published by BNY Mellon Asset
Management. The funded status of the typical plan declined to 79.9
percent at the end of October, down from 80.3 percent at the end of
September, according to the BNY Mellon statistics. Assets for the
typical U.S. corporate plan decreased 1.2 percent, outpacing the
0.6 percent decline in liabilities during the month. For the year,
through October 31, the funding ratio for the typical plan is up
6.0 percentage points, as represented by the BNY Mellon Pension
Liability Index. "After four straight months of improving funding
status, the trend reversed as U.S. stocks fell 2.6 percent and
international stocks fell 1.2 percent in October," said Peter
Austin, executive director of BNY Mellon Pension Services, the
pension services arm of BNY Mellon Asset Management. "Concerns
about the strength of the economic recovery impacted October
results and will continue to influence investor behavior.
Fortunately, the impact of the negative equity returns were
partially offset by a small rise in the Aa corporate discount rate,
which caused liabilities to decline slightly." Plan liabilities are
calculated using the yields of long-term investment grade corporate
bonds. Lower yields on these bonds result in higher liabilities.
"We continue to see increasing interest in liability driven
investing strategies from pension plans seeking to reduce risk,"
said Austin. "Some pension plans have taken advantage of the rally
in the equity markets and shifted assets from equities to long-term
corporate bonds. While improvement in funded status is an
overarching goal for every pension plan, we continue to see a
growing trend in the alignment of risk measures with pension
liabilities." 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. 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 $22.1 trillion in assets
under custody and administration and $966 billion in assets under
management, services $11.9 trillion in outstanding debt and
processes global payments averaging $1.6 trillion per day.
Additional information is available at http://www.bnymellon.com/.
DATASOURCE: BNY Mellon CONTACT: Mike Dunn, +1-212-922-7859, Web
Site: http://www.bnymellon.com/
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