The funding status of U.S. corporate pensions lost a bit of ground in March, slipping 0.4 percentage points to 87.2 percent, thanks to a drop in equities.
Public plans, endowments and foundations saw a similar downward trend, according to the BNY Mellon Investment Strategy and Solutions Group.
The BNY Mellon Institutional Scorecard indicated that most asset classes decreased in value during the month.
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ISSG said assets lost 0.5 percent, but because liabilities also dropped by 0.1 percent — thanks to an increase of two basis points in the Aa corporate discount rate to 3.86 percent — plans didn't fall by that much.
Corporate pension funding status is down 4.9 percent from where it was last year at this time and down 0.1 percent from the start of 2015.
Public defined benefit plans, meanwhile, failed to meet return targets by 1.3 percent, with assets returning a negative 0.7 percent. Year-over-year, public DB plans are 2.7 percent below targets.
Endowments and foundations did almost as poorly, below targets by 2 percent, thanks to a negative real return of 1.1 percent, ISSG said, with assets losing 0.9 percent.
How far pension funding ratios rise or fall is important because they indicate how much money funds have to set aside every year to ensure future retirees are paid. Funding ratios dropped to as low as 64 percent five years ago amid the financial meltdown, but the current funding levels still trail the 95 percent peak seen just before the Great Recession.
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