Falling Interest Rates Drive Pension Plan Liabilities Up 10.2 Percentage Points PITTSBURGH, Dec. 9 /PRNewswire-FirstCall/ -- Funding ratios at the typical U.S. corporate pension plan fell 13.4 percentage points in November, the worst monthly performance since the stock market crash of 1987, as declining interest rates sent liabilities soaring by 10.2 percentage points, according to BNY Mellon Asset Management. Asset returns in a moderate risk portfolio (60 percent equities, 40 percent bonds) lost an additional 3.2 percentage points as global equity markets continued their decline. For the year to date, funding ratios for typical plans have declined nearly 20 percentage points. "Pension plans have seen their equity investments fall by more than 40 percent over the course of the year," said Peter Austin, executive director of BNY Mellon Pension Services. "Now in November, the drop in high-grade corporate yields has produced a steep increase in liability values." "We remain very concerned about the impact of narrowing corporate spreads on pension plan funding," Austin noted. "The increase in liabilities in November was caused by a shift in the corporate yield curve, not a narrowing of corporate spreads, which remain at all-time highs. When corporate spreads narrow, there is a strong likelihood that plan liabilities will increase. Plan sponsors need to be aware of the specific risks that a narrowing of spreads creates for their plan. The good news is that many of these risks can be managed through liability driven investing and other strategies." 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 $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, +1-212-922-7859, Web Site: http://www.bnymellon.com/

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