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Funding Status of U.S. Pensions rises to
75.9 Percent, according to BNY Mellon Asset
-- September produced the strongest
one-month gain this year in funding status
for the typical U.S. corporate pension plan
as rebounding stock markets propelled the
funded status of the typical plan 4.6
percentage points higher to 75.9 percent,
according to monthly statistics published by
BNY Mellon Asset Management.
For the month of September, assets for the
typical plan increased 5.7 percent as U.S.
equity markets rose 9.4 percent and
international stocks increased 9.8 percent,
according to the BNY Mellon statistics.
The pension plans also benefitted from a
small increase in the Aa corporate discount
rate to 4.98 percent from 4.92 percent at
the end of August, the report said.
This increase in the discount rate sent the
liabilities for the typical plan down 0.7
percent, according to the BNY Mellon Pension
Summary Report for September
Plan liabilities are calculated using the
yields of long-term investment grade
corporate bonds. Higher yields on these
bonds result in lower liabilities.
"The September rally helped recover much of
the funded-status deterioration that
occurred during August, when both the equity
markets and interest rates declined and left
the typical plan in its worst position since
2005," said Peter
Austin, executive director of BNY
Mellon Pension Services, the pension
services arm of BNY Mellon Asset Management.
"Despite this significant market rally, the
typical plan's funded status finished
September 7.6 percentage points lower than
it was at the beginning of the year."
Austin added, "The last two months
illustrate the high volatility of pension
plan funding levels that is prompting many
plan sponsors to take steps to reduce plan
funding volatility. Funding volatility is a
reflection of the risks that plan sponsors
are assuming, which go well beyond
investment risk and interest rate risk.
Ensuring that the risk profile of a
pension plan aligns with the sponsor's
ability and willingness to assume risk is
becoming a high priority for plan sponsors.
Establishing a long-term pension risk
management framework that includes
traditional liability driven investing (LDI)
strategies and/or dynamic asset allocation
is a path that sponsors are finding helpful
in these challenging economic times. "
BNY Mellon Asset Management is
the umbrella organization for BNY Mellon's
affiliated investment management firms and
global distribution companies.
BNY Mellon is
a global financial services company focused
on helping clients manage and service their
financial assets, operating in 36 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
It has $21.8
assets under custody and administration and $1.0
assets under management, services $11.6
outstanding debt and processes global
payments averaging $1.5
BNY Mellon is the corporate brand of The
Bank of New York Mellon Corporation (NYSE:
BK). Additional information is available at www.bnymellon.com.
All information source BNY Mellon Asset
Management as of June
30, 2010. 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