NEW YORK, Sept. 3, 2015 /PRNewswire/ -- The funded
status of the typical U.S. corporate pension plan declined in
August, dropping by 2.5 percentage points to 84.2 percent. While
liabilities fell slightly due to widening credit spreads, the
decline was driven by a larger drop in asset values, according to
BNY Mellon Fiduciary Solutions. Public plans, foundations and
endowments also failed to meet targets due to declining asset
values.
For the typical U.S. corporate plan, funded status dipped as low
as 81.2 percent on August 24 but has
since rebounded. Liabilities fell by 0.9 percent during the month,
with the Aa Corporate discount rate rising by 9 basis points to
4.44 percent.
Plan liabilities are calculated using the yields of long-term
investment grade bonds. Higher yields on these bonds result in
lower liabilities.
"The second half of August served as a wake-up call to investors
who had been lulled to sleep by several months of low volatility in
the markets," said Andrew D.
Wozniak, head of BNY Mellon Fiduciary Solutions. "Corporate
defined benefit plan sponsors were somewhat insulated from the full
brunt of the volatility due to rising credit spreads, which led to
a decline in liabilities."
Public defined benefit plans in August missed their return
target by 4.7 percent as assets declined 4.1 percent, according to
the August BNY Mellon Institutional Scorecard. Public plans
have fallen short on year-to-date return targets by 6.6 percent and
remain below their annual return target.
The August BNY Mellon Institutional Scorecard also noted that
for endowments and foundations, real return was down 4.4 percent.
According to the monthly report, asset returns for the typical
endowment and foundation fell 4.3 percent over the past year, which
is behind the spending plus inflation target by 9.8 percent.
"The decline in asset values that hit typical public defined
benefit plans, endowments and foundations was primarily due to poor
equity performance across the globe", said Wozniak. "Weakness
in China is likely to emerge as
the culprit behind the declines."
Notes to Editors:
BNY Mellon Fiduciary Solutions is a division of The Bank of New
York Mellon.
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 June 30, 2015, BNY Mellon had $28.6 trillion in assets under custody and/or
administration, and $1.7 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 June 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.
Contact: Melissa Cassar
+1 212 635 6038
melissa.cassar@bnymellon.com
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SOURCE BNY Mellon