NEW YORK, Nov. 11, 2015 /PRNewswire/ -- According to the BNY Mellon Institutional Scorecard -- available for download, here -- the funded status of the typical U.S. corporate pension plan rose in October, increasing by 2.9 percentage points, to 84.7 percent. Corporate pensions are now up 2.4 percent year-to-date, after briefly dipping into negative territory in September. Public plans and foundations & endowments both exceeded the Scorecard's monthly return targets by 3.9, and 3.8 percent, respectively.
For the typical U.S. corporate plan, Aa corporate discount rates fell by 3 basis points in October, to 4.35 percent, as investment grade spreads tightened. The decline in rates led to an increase in liabilities of 0.8 percent, while assets appreciated 4.2 percent.
"For the first time since mid-summer, investors finally saw relief from market headwinds, as equities of all flavors had a strong month," said Andrew D. Wozniak, head of BNY Mellon Fiduciary Solutions. "Corporate defined benefit plan sponsors felt the combined effects of both appreciating asset values and relatively stable liabilities, which led to funded status increases for the typical plan."
Public defined benefits in October exceeded their return target by 3.9 percent, as assets increased by 4.5 percentage points, according to the October BNY Mellon Institutional Scorecard. Still, public plans are short on their year-to-date return target by 5.6 percent, and one year return target by 6.9 percent.
The October BNY Mellon Institutional Scorecard also noted that endowments and foundations surpassed their monthly spending plus inflation target by 3.8 percent. Despite the strong October, asset returns for the typical endowment and foundation are still down 53 basis points over the past year, which is behind the spending plus inflation target by 5.1 percent.
"Investors are starting to come around on risk asset exposure, which definitely helped the equity markets this month. High yield credit and emerging market debt also saw gains -- up 2.7 and 2.6 percent, respectively. Inflation has been virtually non-existent year-to-date, and is negative over the past 12 months," said Wozniak. "The rise in asset values with controlled inflation particularly benefited typical public defined benefit plans, endowments and foundations. We hope to see this trend continue in the months ahead."
Notes to Editors:
BNY Mellon Fiduciary Solutions is a division of The Bank of New York Mellon. To view past BNY Mellon Institutional Scorecard data, click here.
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of Sept. 30, 2015, BNY Mellon had $28.5 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.
All information source BNY Mellon as of September 30, 2015. This press release is qualified for issuance in the US only and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Investment Management to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance. A BNY Mellon Company.
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