June 02, 2015

Funded Status of U.S. Corporate Pensions Rises to 91.6 Percent, According to BNY Mellon ISSG

Public Plans, Foundations and Endowments Miss Targets

NEW YORK, June 2, 2015 /PRNewswire/ -- The funded status of the typical U.S. corporate pension plan increased 1.5 percentage points in May to 91.6 percent, but public plans, foundations and endowments missed their targets for the month as flat markets failed to raise the value of their assets, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG).  

The corporate plans benefited from lower liabilities, as discount rates rose for the fourth straight month, according to the BNY Mellon Institutional Scorecard.

For the typical U.S. corporate plan, assets in May fell 0.2 percent; while liabilities declined 1.9 percent as the Aa corporate discount rate rose 15 basis points to 4.20 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 at its highest level since it was 92.0 percent in June 2014, and it is 4.3 percentage points higher than at the beginning of the year.

"The rising rates have been the biggest driver in funded status in 2015," said Andrew D. Wozniak, head of fiduciary solutions, ISSG.  "While asset returns have only been approximately three percent this year, the funded status has risen more than four percentage points because liabilities have fallen."

Public defined benefit plans in May missed their return target by 0.7 percent as assets declined 0.1 percent, according to the monthly report.  Year over year, public plans are 3.5 percent below their annual return target, ISSG said.

For endowments and foundations, the real return in May was -0.6 percent as assets were flat, ISSG said.   Year over year, endowments and foundations are behind their inflation plus spending target by 2.2 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 March 31, 2015, 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 March 31, 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.        

Contact: Mike Dunn  
+1 212 922 7859