Funding Status of U.S. Pension Plans Improves 6.4 Percentage Points, According to BNY Mellon Asset Management
April 06 2009 - 7:47AM
PR Newswire (US)
Market Rally, Wider Spreads Drive Gains BOSTON, April 6
/PRNewswire-FirstCall/ -- A powerful stock market rally and wider
spreads for corporate bonds combined to improve the funding status
of a typical U.S. corporate pension plan by 6.4 percentage points
in March, according to monthly statistics published by BNY Mellon
Asset Management. "This was, by far, the best month for pension
plans since the funding status of these plans began deteriorating
in May 2008," said Peter Austin, executive director of BNY Mellon
Pension Services, the pension services arm of BNY Mellon Asset
Management. Assets for a typical moderate risk portfolio jumped 5.6
percent, while liabilities fell 3.5 percent during the month. For
the year to date, the funding ratio for the typical plan is now up
5.7 percentage points, as represented by the BNY Mellon Pension
Liability Index. "The strong rebound in stock markets around the
world provided much-needed relief for pension funds," Austin said.
"They also benefited as long double A corporate bond yields rose 60
basis points during March, which contributed to an increase in the
double A corporate discount rate from 6.84 percent to 7.19 percent,
driving down the value of liabilities." Still, Austin warned plans
face the threat of narrowing spreads and lower yields. He said,
"With corporate bond yields well over their historic levels, we
expect them to drop over time, which would increase the liabilities
for these plans. If that were to happen, pension plans will need
either more help from the equity markets or increasing skills in
managing their exposure to pension liabilities." Notes to Editors:
BNY Mellon Asset Management is the umbrella organization for The
Bank of New York Mellon Corporation's affiliated investment
management firms and global distribution companies. 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, services more than $11 trillion in outstanding
debt, and processes global payments averaging $1.8 trillion per
day. Additional information is available at
http://www.bnymellon.com/ All information source BNY Mellon Asset
Management as at 31 December 2008. 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. A Bank of New York Mellon Company 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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