NEW YORK, July 7, 2015 /PRNewswire/ -- The funded status of
the typical U.S. corporate pension plan increased 1.5 percentage
points in June to 87.8 percent, as liabilities declined more
rapidly than assets during the month, according to the BNY Mellon
Investment Strategy and Solutions Group (ISSG).
The June BNY Mellon Institutional Scorecard is the first to
reflect a realignment in the December
2014 funded status for the typical U.S. corporate plan. The
realignment resulted from recent changes in mortality tables
produced by the Society of Actuaries to estimate life expectancies.
These longer life expectancy assumptions caused a five
percentage-point reduction in the December
2014 funded status, which was then carried forward, ISSG
said.
"We expect additional revisions as more companies adopt these
changes in the mortality tables," said Andrew D. Wozniak, head of fiduciary solutions,
ISSG.
Public plans, endowments and foundations all missed their return
targets in June due to falling asset values, ISSG said.
For the typical U.S. corporate plan, assets in June fell 2.1
percent; while liabilities declined 3.8 percent as the Aa corporate
discount rate rose 29 basis points to 4.49 percent, according to
the June scorecard. This was the fifth consecutive month for
a rise in the discount rate and the third consecutive month in
which most asset classes outperformed the liability at the typical
corporate plan, ISSG said.
Plan liabilities are calculated using the yields of long-term
investment grade bonds. Higher yields on these bonds result
in lower liabilities.
"The significant rise in the Aa corporate discount rate in June
continued the momentum toward lower liabilities," said
Wozniak. "Discounting the impact of the new mortality
tables, the funded status of typical corporate plans continues to
improve because of the declining liabilities."
Public defined benefit plans in June missed their return target
by 2.3 percent as assets declined 1.7 percent, according to the
monthly report. Year over year, public plans are 6.8 percent
below their annual return target, ISSG said.
For endowments and foundations, the real return in June was -2.0
percent as assets fell 1.3 percent, ISSG said. Year
over year, endowments and foundations are behind their inflation
plus spending target by 5.6 percent, ISSG said.
Notes to Editors:
The BNY Mellon Investment Strategy and Solutions Group is a
division of The Bank of New York Mellon.
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investment management organizations and one of the top U.S. wealth
managers, with $1.7 trillion in
assets under management. It encompasses BNY Mellon's affiliated
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www.bnymellon.com.
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All information source BNY Mellon as of March 31, 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
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or in any circumstance in which such offer or solicitation is
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Contact:
Mike Dunn
+1 212 922 7859
mike.g.dunn@bnymellon.com
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SOURCE BNY Mellon