Market Gains in November Boost Funding Status of U.S. Pensions, According to BNY Mellon Asset Management
December 04 2009 - 8:06AM
PR Newswire (US)
Funding Status of Typical Corporate Plan Reaches Best Level since
May BOSTON, Dec. 4 /PRNewswire-FirstCall/ -- U.S. stocks rose 5.7
percent in November, contributing to a 2.6 percentage-point
improvement in the funded status of the typical U.S. corporate
pension plan, according to monthly figures published by BNY Mellon
Asset Management. The funded status of the typical plan improved to
82.5 percent at the end of November, which was the highest level
since May, and up from 79.9 percent at the end of October,
according to the BNY Mellon statistics. Assets for the typical U.S.
corporate plan rose 3.6 percent, outpacing the 0.2 percent gain in
liabilities during the month, which reflected interest accruals as
the discount rate for November was unchanged from October. For the
year, through November 30, the funding ratio for the typical plan
is up 8.6 percentage points, as represented by the BNY Mellon
Pension Liability Index. "U.S. corporate pension plans continued
their road to recovery as domestic and international equity markets
registered strong results," said Peter Austin, executive director
of BNY Mellon Pension Services, the pension services arm of BNY
Mellon Asset Management. "Equities have rallied in eight of the
last nine months and have been the driving force for the funding
improvement. Liability discount rates are only 14 basis points
lower for the year, which has limited the impact on pension plan
liabilities. Plan sponsors that maintained their equity
allocations, which hasn't been easy given market volatility, have
been rewarded for their commitment to their strategic asset
allocation." Plan liabilities are calculated using the yields of
long-term investment grade corporate bonds. Lower yields on these
bonds result in higher liabilities. "With funding levels near 2009
highs and 2010 financial planning underway in many organizations,
there is increased interest in discussing pension risk reduction
programs," said Austin. "These programs would include new or
increased allocations to liability driven investing (LDI)
strategies. Plan sponsors remain fearful of plan surplus/deficit
volatility, which remains a relevant topic given the fragility of
the global markets." 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/.
All information source BNY Mellon Asset Management as of September
30, 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. DATASOURCE: BNY Mellon CONTACT: Mike Dunn,
+1-212-922-7859, Web Site: http://www.bnymellon.com/
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