Funding Status of U.S. Pension Plans Improves 3.9 Percentage Points in April, According to BNY Mellon Asset Management
May 06 2009 - 8:07AM
PR Newswire (US)
Plans Benefit from Second Strong Month of Equity Returns BOSTON,
May 6 /PRNewswire-FirstCall/ -- Driven by a second consecutive
month of strong performances by global equities, the funded status
of a typical U.S. corporate pension plan improved by 3.9 percentage
points in April, according to monthly statistics published by BNY
Mellon Asset Management. Assets for a typical moderate risk
portfolio increased 6.7 percent, outpacing the 1.4 percent gain in
liabilities during the month. For the year to date, the funding
ratio for the typical plan is now up 9.5 percentage points, as
represented by the BNY Mellon Pension Liability Index. "April's
continuation of the global equity market rebound that started in
March brought the funded status of the typical U.S. corporate
pension plan nearly back to levels that we last saw at the end of
November 2008," said Peter Austin, executive director of BNY Mellon
Pension Services, the pension services arm of BNY Mellon Asset
Management. "In April, the yields on long corporate Aa bonds
decreased slightly, contributing to the slight rise in liabilities.
We have been expecting these yields, which were well over their
historic levels, to begin declining at some point." Austin noted
that corporate bond spreads, while narrowing in April, continue to
be above typical past levels. "In April, the decline of more than
50 basis points in corporate spreads was accompanied by a rise in
Treasury yields. We continue to be wary of narrowing corporate
spreads, which have the potential to increase liabilities," he
said. "At that point, plans will need additional help from equities
to protect their funded status; or they will need to be
particularly astute in managing their exposure to liabilities
through effective asset allocation." 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 $19.5 trillion in
assets under custody and administration, $881 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/.
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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