Funding Status of U.S. Pensions Declines to 83.7 Percent in January, According to BNY Mellon Asset Management
February 03 2010 - 8:00AM
PR Newswire (US)
Spurs growing interest in liability driven investment strategies
BOSTON, Feb. 3 /PRNewswire-FirstCall/ -- Sliding stock markets and
rising liabilities combined to reduce the funded status of the
typical U.S. corporate pension plan in January by 1.8 percentage
points to 83.7 percent, according to monthly figures published by
BNY Mellon Asset Management. It was the first decline in funding
status since October. Assets for the typical U.S. corporate pension
plan fell 1.6 percent and liabilities increased 0.5 percent for the
month, as reported by the BNY Mellon Pension Summary Report for
January 2010. "Economic concerns weighed on U.S. stocks, which was
the primary factor driving assets lower for the month," said Peter
Austin, executive director of BNY Mellon Pension Services, the
pension services arm of BNY Mellon Asset Management. "International
stocks fell even more than U.S. stocks, further contributing to the
asset decline. The yields on long Aa corporate bonds were mostly
unchanged, but liabilities increased slightly due to interest
accruals." Plan liabilities are calculated using the yields of
long-term investment grade corporate bonds. Higher yields on these
bonds result in lower liabilities. "The sudden reversal of stock
markets in January is a good reminder that volatility can quickly
return to the markets and impact the funded status of corporate
pension plans," said Austin. "While the funded status of plans
improved significantly in 2009, the January performance reminds
plan sponsors that risk is inherent in corporate pension plans, and
requires close monitoring of plan assets to ensure that risk/return
relationships are consistent with company objectives. We are seeing
an increase in liability driven investing (LDI) activity as more
corporate plan sponsors seek solutions for their pension risk
exposure." Notes to Editors: BNY Mellon Asset Management is the
umbrella organization for BNY Mellon's affiliated investment
management firms and global distribution companies. BNY Mellon is
the corporate brand of The Bank of New York Mellon Corporation
(NYSE:BK). BNY Mellon 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. BNY Mellon 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 $22.3 trillion in
assets under custody and administration, $1.1 trillion in assets
under management, services $12.0 trillion in outstanding debt and
processes global payments averaging $1.6 trillion per day.
Additional information is available at http://www.bnymellon.com/.
All information source BNY Mellon Asset Management as at December
31, 2009. This press release is qualified for issuance in the US
only and is for information purposes only. It does not constitute
an offer or solicitation of securities or investment services or an
endorsement thereof in any jurisdiction or in any circumstance in
which such offer or solicitation is unlawful or not authorized.
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 BNY Mellon
Company(SM) DATASOURCE: BNY Mellon CONTACT: Mike Dunn,
+1-212-922-7859, Web Site: http://www.bnymellon.com/
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