Funding Status of U.S. Pension Plans Improves Five Percentage Points, According to BNY Mellon Asset Management
February 04 2009 - 9:35AM
PR Newswire (US)
Lower Liabilities Drive Improvement and Overcome Slide in Stock
Markets BOSTON, Feb. 4 /PRNewswire-FirstCall/ -- Funding ratios at
the typical U.S. corporate pension plan rebounded five percentage
points in January as higher corporate bond yields drove liabilities
10.1 percent lower, according to BNY Mellon Asset Management. The
improvement came despite a 5.5 percent decline for assets at
moderate risk pension portfolios as stock markets fell. The higher
funding ratios provided some relief to battered pension plans,
which experienced a decline of 31.5 percentage points in funded
status during 2008, as represented by the BNY Mellon Pension
Liability Index. "Long-duration, high-quality corporate bond yields
rose 70 basis points in January," said Peter Austin, executive
director of BNY Mellon Pension Services. "Corporate bond yields
remain at historically high levels and corporate spreads continue
to be very wide. Plan sponsors are increasingly aware of the
negative results that falling corporate yields would inflict on
pension liabilities and are quite wary of the current environment."
Austin noted that BNY Mellon Asset Management is seeing significant
interest in its longer term corporate bond strategies from pension
plans that are seeking to limit the impact that a sharp fall in
bond yields would have on their funded status. "A substantial rally
in the equity markets would help these plans. But given the
volatility of the equity markets over the last year, many pension
plans also are focusing attention on limiting the damage that can
occur on the liability side," he added. 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 $20.2 trillion in
assets under custody and administration, $928 billion in assets
under management and services more than $11 trillion in outstanding
debt. Additional information is available at bnymellon.com.
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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