April 06, 2015

Funded Status of U.S. Corporate Pensions Dips Slightly in March, According to BNY Mellon ISSG

Public Plans, Foundations and Endowments Miss Return Targets


NEW YORK, April 6, 2015 /PRNewswire/ -- The funded status of the typical U.S. corporate pension plan declined 0.4 percentage points in March to 87.2 percent in March, as most equity categories fell, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG).  

Public plans, endowments and foundations missed their targets for the month, as most asset classes lost value, according to the BNY Mellon Institutional Scorecard.

For the typical U.S. corporate plan, assets in March decreased 0.5 percent; while liabilities fell 0.1 percent as the Aa corporate discount rate rose two basis points to 3.86 percent. 

Plan liabilities are calculated using the yields of long-term investment grade bonds.  Higher yields on these bonds result in lower liabilities. 

The funded status is 4.9 percentage points lower than at this time last year and 0.1 percentage points lower than at the beginning of the year.

"March was a lackluster month for most markets, with little fluctuation in asset values," said Andrew D. Wozniak, head of fiduciary solutions, ISSG.  "However, volatility increased as investors anticipate a shift in U.S. monetary policy.  Higher rates would reduce liabilities, although investors would have to decide where to allocate assets so they are best positioned in the new interest rate environment."

Public defined benefit plans in March missed their return target by 1.3 percent as assets had a negative return of 0.7 percent, according to the monthly report.  Year over year, public plans remain below their return target by 2.7 percent, ISSG said.

For endowments and foundations, the real return in March was -1.1 percent as assets returned -0.9 percent, ISSG said.   Year over year, endowments and foundations are behind their inflation plus spending target by 2.0 percent, ISSG said.

Notes to Editors:

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 $1.7 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 investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of Dec. 31, 2014, BNY Mellon had $28.5 trillion in assets under custody and/or administration, and $1.7 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. 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 December 31, 2014. 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.       

Contact:
Mike Dunn
+1 212 922 7859
mike.g.dunn@bnymellon.com

 

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SOURCE BNY Mellon