Funding Status of U.S. Pensions Rebounds to 76.9 Percent in July, According to BNY Mellon Asset Management

BOSTON, Aug. 5 /PRNewswire-FirstCall/ -- Strong performances by stocks around the world drove the assets of the typical U.S. corporate pension plan higher in July, sending the funded status of these plans up 2.9 percentage points to 76.9 percent, according to monthly statistics published by BNY Mellon Asset Management.  

U.S. stocks rose 6.9 percent and international stocks returned 9.5 percent, mostly due to the strengthening euro, which resulted in an increase of 4.8 percent for the value of the assets in these plans in July, according to the BNY Mellon Pension Summary Report for July 2010.  The report also notes that corporate spreads in July tightened slightly, which lowered the Aa corporate discount rate to 5.29 percent from 5.34 percent.  This slight decline sent liabilities for the typical corporate pension plan up 0.9 percent for the month.

Plan liabilities are calculated using the yields of long-term investment grade corporate bonds.  Lower yields on these bonds result in higher liabilities.

"The July rebound in equities provided much-needed relief for pension plans that had suffered through three consecutive months of falling assets and declining funded status," said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management. "Despite the strong July performance of the equities markets, the funded status for the typical plan is still 6.6 percentage points lower than it was at the beginning of 2010."

Austin noted that volatility remains a concern for U.S. corporate pension plans, adding, "Corporate plans continue to express interest in taking a more active approach to limit their exposure to wide swings in interest rates and portfolio returns.   In particular, we are seeing plans build on their liability driven investing (LDI) strategies by setting deadlines to reach targeted funding levels.  While the results in July were very welcome, they are also a reminder of the sensitivity of the markets and the challenges inherent in pension plan management."

Notes to Editors:

BNY Mellon Asset Management is the umbrella organization for 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. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $21.8 trillion in assets under custody and administration and $1.0 trillion in assets under management, services $11.6 trillion in outstanding debt and processes global payments averaging $1.5 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available at www.bnymellon.com.

All information source BNY Mellon Asset Management as of June 30, 2010. 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 Asset 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(SM)

SOURCE BNY Mellon