June 07, 2012

Funded Status of U.S. Pensions Declines to Lowest Recorded Level, According to BNY Mellon

Level Decreases to 69.8 Percent as Record Low Interest Rates Boost Liabilities

BOSTON, June 7, 2012 — The funded status of the typical U.S. corporate pension plan in May fell 6.5 percentage points to 69.8 percent, its lowest level since BNY Mellon began tracking this information in December 2007.

The decrease was driven by the worst monthly decline in U.S. equity markets in 2012 and lower interest rates, which sent liabilities higher, according to the BNY Mellon Pension Summary Report for May 2012. The report added that the two trends combined to erase all of the gains that had been recorded in the first quarter of 2012.

Assets for the moderate risk U.S. corporate pension plan in May fell 3.9 percent as U.S. equity markets declined 6.2 percent and international developed markets dropped 11.5 percent on uncertainty regarding the Greek debt and related euro zone issues, according to the BNY Mellon report.

Liabilities rose 5.1 percent as the Aa Corporate discount rate fell 31 basis points during the month to a record low of 3.98 percent, BNY Mellon said. Plan liabilities are calculated using the yields of long-term investment grade corporate bonds. Lower yields on these bonds result in higher liabilities.

"After a strong first quarter, investors are again focusing on continuing weakness in European markets and lack of a coordinated long-term solutions to the debt issues, just as they did in 2011," said Jeffrey B. Saef, managing director, BNY Mellon Asset Management, and head of the BNY Mellon Investment Strategy & Solutions Group (a division of The Bank of New York Mellon).  "Until investors have more clarity, we are likely to see continuing weak equity markets and low interest rates."

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 $26.6 trillion in assets under custody and administration and $1.3 trillion in assets under management, services $11.9 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 Asset Management as of March 31, 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.

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