October 04, 2012

Funded Status of U.S. Corporate Pensions Rises for Second Straight Month to 75 Percent, According to BNY Mellon

First Two-Month Winning Streak since February

NEW YORK, October 4, 2012 — The funded status of the typical U.S. corporate pension plan in September increased 1.8 percentage points to 75 percent as stock markets continued to rally, according to BNY Mellon. In addition, BNY Mellon said pension plans benefited from a decline in liabilities as interest rates rose.

This was the first time since February that the funded status of these plans improved for two months in a row, according to the BNY Mellon Pension Summary Report for September 2012.   Assets for the typical plan increased 1.7 percent as stock markets in the U.S. and around the world continued to rally, the report said.

Liabilities for the typical plan declined 0.7 percent as the Aa corporate discount rate rose six basis points to 3.78 percent, BNY Mellon said. Plan liabilities are calculated using the yields of long-term investment grade bonds.  Higher yields on these bonds result in lower liabilities.

"Pension plans have been benefiting all year from rising equity markets but have had their gains offset by persistent low interest rates that have sent liabilities higher," said Jeffrey B. Saef, managing director, BNY Mellon Asset Management, and head of the BNY Mellon Investment Strategy and Solutions Group.  "We've now had two months in a row of slightly rising interest rates, which have brought liabilities lower.  The result has been the first two-month streak of improved funded status since February 2012."

Year to date, the funded status of the typical U.S. corporate plan is down 0.3 percentage points, BNY Mellon said.

The BNY Mellon Investment Strategy and Solutions Group is a division of The Bank of New York Mellon.

BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.3 trillion in assets under management. It encompasses BNY Mellon's affiliated investment management firms, wealth management services and global distribution companies. More information can be found at www.bnymellon.com.

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, offering superior investment management and investment services through a worldwide client-focused team. It has $27.1 trillion in assets under custody and administration and $1.3 trillion in assets under management, services $11.5 trillion in outstanding debt and processes global payments averaging $1.4 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com or follow us on Twitter@BNYMellon.

All information source BNY Mellon as of June 30, 2012. 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 Investment 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