The funded status of U.S. corporate pension plans dropped 4.2 percent in Januaryto 91 percent, according to the BNY Mellon Investment Strategy& Solutions Group. The drop was fueled by falling interestrates and declining stocks.

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Public defined benefit plans, endowments and foundations alsolost ground in January as a result of the falling equity markets,BNY Mellon said.

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“January’s decline was the largest monthly drop in funded statusfor U.S. corporate plans since May 2012,” said Andrew Wozniak,director of portfolio management and investment strategy for theInvestment Strategy & Solutions Group.

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Assets for corporate plans also fell 0.4 percent, whileliabilities increased 4.2 percent. The increased liabilities areattributed to a 27 basis point decline in the Aa corporate discountrate to 4.66 percent, the report said. Plan liabilities arecalculated using the yields of long-term investment grade bonds.Lower yields on these bonds result in higher liabilities.

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On the public side, assets at the typical defined benefit planfell nearly 1.4 percent in January, but year over year, publicplans are ahead of their target by 1.5 percent.

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Endowments and foundations lost 1.4 percent, with assets falling0.9 percent. Investments in real estate and hedge funds helpedendowments and foundations to mitigate their asset losses for themonth, the report said.

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Mercer, which tracks the funded status of the S&P 1500pension plans, said they were 89 percent funded at the end ofJanuary, down from 95 percent funded at the end of 2013. JonathanBarry, a partner in Mercer’s retirement business in Boston, pointedout that even though it was a rough start to the year for pensions,funded status and interest rates are still well above where theywere last year.

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At the end of January 2013, pension plans included in the Mercersurvey averaged 77 percent funded.

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The aggregate funding deficit of surveyed plans rose to $239billion, an increase of $129 billion from December’s $103 billiondeficit, Mercer found.

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