This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Funded Status Of U.S. Corporate Pensions Falls To 88.1 Percent In August, According To BNY Mellon ISSG

Stocks in this article: BK

NEW YORK, Sept. 5, 2013 /PRNewswire/ -- The funded status of typical U.S. corporate pension plans fell 0.1 percentage points to 88.1 percent in August, according to the BNY Mellon Investment Strategy & Solutions Group (ISSG).  Corporate pension plans, public pension plans, and endowments and foundations in the U.S. all lost ground financially in August as rising interest rates led to lower values for most asset classes, ISSG said.

Despite the lower asset values, corporate pension plans benefited from the rising rates as they pushed liabilities lower, according to the BNY Mellon Institutional Scorecard.   Year to date, the funded ratio for the corporate plans is up 11.0 percentage points, ISSG said.

The decline in liabilities for corporate plans resulted from the 13 basis-point-increase in the Aa corporate discount rate, which increased to 4.78 percent in August. Plan liabilities are calculated using the yields of long-term investment grade bonds.  Higher yields on these bonds result in lower liabilities.

However, the falling liability values from rising bond yields were not enough to offset the decline in assets from struggling US equity markets, according to the ISSG report.  Overall, typical corporate benefit plan assets in August fell 1.6 percent as liabilities fell 1.5 percent, the report said.

For endowments and foundations, the net return over spending and inflation was -2.1 percent in August, as plan assets fell 1.5%. Over the past 12 months, plan assets are up 9.4%, beating the spending and inflation target by 2.8 percent.

For public plans, the excess return over the annualized 7.5 percent return target was -2.2 percent in August, as assets fell 1.6 percent over the month. Public plan assets must earn at least 0.6 percent each month to keep pace with the 7.5 percent annual target.

"Market volatility and rising interest rates contributed to lower assets for all three institutional categories," said Jeffrey B. Saef, managing director, BNY Mellon Investment Management, and head of the ISSG.  "Endowments and foundations benefited from their 22 percent allocation to hedge funds and absolute return strategies, which helped buoy plan assets.  Public plans were hurt by their relatively high allocation to equities, which comprised more than half of the typical U.S. public plan portfolio."

Notes to Editors:

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,918.16 +113.36 0.64%
S&P 500 2,073.65 +3.00 0.14%
NASDAQ 4,773.1120 +7.7320 0.16%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs