October 06, 2015

Funded Status of U.S. Corporate Pensions Falls Again in September to 81.8 Percent, According to BNY Mellon Fiduciary Solutions

Institutional investors of all types faced another difficult month

NEW YORK, Oct. 6, 2015 /PRNewswire/ -- The funded status of the typical U.S. corporate pension plan declined in September for the third consecutive month, dropping by 2.4 percentage points to 81.8 percent, and is now down year-to-date, according to BNY Mellon Fiduciary Solutions. Public plans, foundations and endowments also failed to meet targets due to declining asset values.    

For the typical U.S. corporate plan, funded status peaked at 85.5 percent on September 16 before falling 3.7 percent in the second half of the month, driven by an overall 1.9 percent decline in assets since August.

Meanwhile, liabilities increased 1.1 percent as the Aa Corporate discount rate fell by six basis points. Plan liabilities are calculated using the yields of long-term investment grade bonds. Lower yields on these bonds result in higher liabilities. 

"Investors continued to face strong headwinds in the market, especially through the latter part of September," said Andrew D. Wozniak, head of BNY Mellon Fiduciary Solutions. "Corporate defined benefit plan sponsors felt the combined effects of both declining asset values and increasing liabilities, which led to funded status declines for the typical plan."

Public defined benefit plans in September missed their return target by 2.8 percent as assets declined 2.2 percent, according to the September BNY Mellon Institutional Scorecard. Public plans have fallen short on year-to-date and one year return targets by 9.4 percent and 10.1 percent, respectively.

The September BNY Mellon Institutional Scorecard also noted that endowments and foundations missed their spending plus inflation target by  2.8 percent. According to the monthly report, asset returns for the typical endowment and foundation fell 3.5 percent over the past year, which is behind the spending plus inflation target by 8.6 percent.

"High Yield securities and equities continued to struggle, leading to the decline in asset values that hit typical public defined benefit plans, endowments and foundations," said Wozniak. "Fixed income ex-High Yield and REITs were the exception, performing well over the month as investors moved away from risk."

Notes to Editors:

BNY Mellon Fiduciary Solutions is a division of The Bank of New York Mellon.

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 June 30, 2015, BNY Mellon had $28.6 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. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

All information source BNY Mellon as of June 30, 2015. 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. 

Melissa Cassar 
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