The funded status for the typical U.S. corporate pension plan rose to 74.8 percent in October because of strong asset returns and no change in liabilities, according to a report by BNY Mellon Asset Management.
Year-to-date, the funded status has declined 10.3 percentage points, the BNY Mellon Pension Summary Report for October says.
In October, assets for the typical corporate plan rose 6.8 percent. The rebound in equities reversed a three-month trend of falling stock values. Plan liabilities are calculated using the yields of long-term investment grade corporate bonds. As there was no material movement in these yields, the liabilities held steady.
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"Apparent progress toward a solution to the European debt crisis resulted in investor optimism," says Jeffrey Saef, managing director of BNY Mellon Asset Management and head of the Investment Strategy & Solutions Group. "However, as the probability of a resolution rises and recedes, we see continuing market volatility."
Saef added that global events such as the European debt crisis and the U.S. budget negotiations have become important factors for pension funds as they make asset allocation decisions. "If favorable outcomes can be achieved for these issues, it could set the stage for continuing the rally in equities that we saw in October. Such a rally would provide significant relief to the funding pressures that sponsors face."
BNY Mellon Asset Management is one of the world's leading asset management organizations encompassing BNY Mellon's affiliated investment management firms and global distribution companies. 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.
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