Increases in Pension Plan Liabilities Outpace Asset Gains in August, According to BNY Mellon Asset Management
September 07 2007 - 7:59AM
PR Newswire (US)
PITTSBURGH, Sept. 7 /PRNewswire-FirstCall/ -- Declining yields of
Treasury bonds were the main reason for a 0.9 percent decline in
the funded status of a typical U.S. pension plan in August,
according to BNY Mellon Asset Management, which tracks the health
of U.S. pension plans through its BNY Mellon Pension Liability
Indexes. The declining yields led to a 2.0 percent increase in the
typical plan's liabilities, versus a 1.1 percent increase in the
assets of a typical moderate risk portfolio. For the year to date,
the funded status of a typical plan is 2.0 percent better than it
was at the beginning of the year as moderate risk assets are up 4.5
percent versus a 2.5 percent increase in liabilities. "The
continuing liquidity difficulties in the fixed income market during
August once again brought a flight to quality," said Peter Austin,
executive director of BNY Mellon Pension Services. "Treasury yields
dipped an average of 12 basis points, increasing the value of
pension liabilities. U.S. stocks recovered half of the losses they
incurred during July, but international stocks were once again
weak." Lower interest rates increase liabilities and the value of
bonds. Unexpected changes in a plan's demographics, among other
factors, also affect the size of the benefit liability. The BNY
Mellon Pension Liability Indexes, which were launched in March
2006, are designed to track the market values and returns of
pension liabilities for young, average and mature pension plans.
(See more about the indexes at
http://www.melloninstitutional.com/public/knowledge/publications/content/publi
cations/liability_index.html .) BNY Mellon Asset Management is a
leading global provider of investment management products and
services that offers a broad range of equity, fixed- income, hedge
and liquidity management products through individual asset
management companies and multiple distribution channels. The Bank
of New York Mellon Corporation is a global financial services
company focused on helping clients manage and move their financial
assets, operating in 37 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 and treasury services through a
worldwide client-focused team. It has more than $20 trillion in
assets under custody and administration and more than $1 trillion
in assets under management. Additional information is available at
http://www.bnymellon.com/. DATASOURCE: Bank of New York Mellon
Corporation CONTACT: Mike Dunn, Bank of New York Mellon
Corporation, +1-212-922-7859, Web site: http://www.bnymellon.com/
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