Highest Level in One Year
NEW YORK, April 3, 2013 — The funded status of the typical U.S. corporate pension plan increased 1.9 percentage points in March 2013 to 82.6 percent, its highest level since March 2012, according to the BNY Mellon Investment Strategy & Solutions Group (ISSG). Year to date, the funded ratio has risen 6.3 percentage points, BNY Mellon ISSG said.
Assets for the typical corporate plan increased 2.1 percentage points as equity markets continued to rally despite concerns on the Cyprus banking situation, according to the BNY Mellon Pension Summary Report for March 2013.
Liabilities for the typical corporate plan decreased 0.3 percent in March, which the report attributed to the four-basis-point increase in the Aa corporate discount rate to 4.09 percent.
Plan liabilities are calculated using the yields of long-term investment grade bonds. Higher yields on these bonds result in lower liabilities.
"Plan funding levels have increased in four of the last five months and are nine percentage points higher than in October 2012," said Jeffrey B. Saef, managing director, BNY Mellon Investment Management, and head of the ISSG. "The markets appear to be shaking off the Cyprus banking situation and other potential volatility-inducing developments and focusing on positive corporate earnings. Pension plans have benefited significantly over the last five months and a significant number are looking to take steps to lock in these gains."
The BNY Mellon Investment Strategy and Solutions Group is a division of The Bank of New York Mellon.
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