Categories: Money & The Economy

Funded Status of U.S. Pensions Falls to 83.6 Percent in June

BOSTON, Aug. 3, 2011 /PRNewswire/ — The funded status of the typical U.S. corporate pension plan in July fell 4.9 percentage points to 83.6 percent, the worst level since the beginning of the year and the lowest funded status since November 2010, according to monthly statistics published by BNY Mellon Asset Management.

Pension plans were hit by both increasing liabilities and falling assets, with the most significant impact coming from a rally in long corporate bonds. Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management, attributed the rally to increased demand for U.S. Treasuries, reflecting the instability of the U.S. and European economies and investors’ flight to quality.

Liabilities increased 5.2 percent as the Aa corporate discount rate decreased 36 basis points to 5.17 percent, according to the BNY Mellon Pension Summary Report for July.   Plan liabilities are calculated using the yields of long-term investment grade corporate bonds.  Lower yields on these bonds result in higher liabilities.

Assets for the typical plan fell 0.7 percent, reflecting declines in U.S. and global equities, the report notes.

“Falling interest rates had a severe impact on the funded status of the typical corporate plan,” said Austin. “As a result of the rate decline, corporate plans gave up all of the gains they had achieved in 2011 and finished July 1.5 percentage points lower than they were at the beginning of the year.”

Austin added the debt ceiling issue and the growing focus on the U.S. budget are making it more difficult for plan sponsors to manage the volatility of funding levels.  He said, “Plans that hedged against falling rates through liability driven investment strategies were most successful in preserving their funded status during July.”

Rich Mitchell

Rich Mitchell is the editor-in-chief of Conservative Daily News and the president of Bald Eagle Media, LLC. His posts may contain opinions that are his own and are not necessarily shared by Bald Eagle Media, CDN, staff or .. much of anyone else. Find him on twitter, facebook and GETTR

Share
Published by
Rich Mitchell
Tags: Pensions

Recent Posts

President Donald Trump’s Schedule for Saturday, June 7, 2025

Schedule Summary: President Donald Trump will attend a UFC fight Saturday night. President Donald Trump’s…

7 hours ago

Tampon Tim Suggests Democrats Start Bullying Against Trump’s Policies.    No Surprise Here: Democrats And Other Leftists Invented Bullying.

So now Tampon Timmy Walz, the failed governor of Minnesota and the failed running mate…

7 hours ago

Judge Who Allowed Harvard To Racially Discriminate Blocks Trump Order Banning Foreign Students From University

A federal judge late on Thursday issued a temporary restraining order against President Donald Trump’s…

7 hours ago

US Economy Added Slightly More Jobs Than Expected In May

U.S. job growth in May was slightly higher than expected, according to data from the…

7 hours ago

KJP Follows Her Own Compass

I have written more stories about Karine Jean-Pierre than anyone other than Joe Biden or…

7 hours ago

The Match That Could Burn Down The CCP Has Been Lit

In a dusty factory town in southwestern China, a 27-year-old worker cheated of 800 yuan ($100) in…

7 hours ago