Rising Equities Contribute to Improvement
NEW YORK, December 5, 2012 — Rising equity markets in November helped drive the funded status of the typical U.S. corporate pension plan to 74.4 percent, a 0.8 percentage-point increase, according to BNY Mellon.
Despite the November gain, the funded status for the typical plan has decreased 0.9 percentage points for the year through November 30, according to the BNY Mellon Pension Summary Report for November 2012.
Assets for the typical plan in November rose 0.7 percent on the strength of rising equities markets. Liabilities fell 0.3 percent as the Aa corporate discount rate rose four basis points to 3.76 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.
"Investors remain cautious as considerable uncertainty remains regarding an agreement on the U.S. budget," said Jeffrey B. Saef, managing director, BNY Mellon Investment Management, and head of the BNY Mellon Investment Strategy and Solutions Group. "After rising earlier in the year, liabilities have held steady recently as the discount rate used to calculate them has had little movement for the last four months."
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 $1.4 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 $27.9 trillion in assets under custody and administration and $1.4 trillion in assets under management, services $11.6 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.