Now, keep up to date with daily feeds of newly posted stories about America's Seniors...click on the box to the left

Funded Status of U.S. Pensions rises to 80.5 Percent, according to BNY Mellon Asset Management

BOSTON, Dec. 7, 2010 /PRNewswire-FirstCall/ -- Assets declined less than liabilities at the typical U.S. corporate pension plan in November resulting in a funded status of 80.5 percent, a slight improvement from the 80.3 percent funded status at the end of October, according to monthly statistics published by BNY Mellon Asset Management.    

Assets for the typical plan declined 0.4 percent as a slight gain of 0.6 percent in the U.S. equity markets was offset by a drop of 4.8 percent in international stocks, according to the BNY Mellon Pension Summary Report for November 2010.  

The increase in the Aa corporate discount rate to 5.32 percent from 5.23 percent drove the typical plan's liabilities 0.7 percent lower during the month, the report said.

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

"We continue to move up from the nadir of funded status that was recorded at the end of August 2010, although we remain below the level that was reported at the beginning of this year," said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management.  

"The positive equity performances of the last three months and steadily rising interest rates have been a welcome change for plan sponsors. If these trends continue, we may see a recovery in funded status of the typical plan in excess of 10 percentage points for the last four months of the year."

Austin added, "While the markets remain concerned with weak economic activity and low interest rates, interest in programs that manage the impact of pension plan funding volatility continues to be very strong.

"Of particular note are solutions that enable sponsors to target a specific funding level by a set deadline. Should the equity markets continue their recovery with a complementary increase in interest rates, we expect a significant increase in enthusiasm for target date funding solutions."