NEW YORK, July 7, 2016 /PRNewswire/ -- According to
the BNY Mellon Institutional Scorecard, which is available online
here, the funded status of typical U.S. corporate defined benefit
(DB) plans fell by 2.1 percent in June, to 78.1 percent. The slide
represents the lowest month-end funded status yet for U.S.
corporate DB plans in 2016. Asset growth of 1.5 percent was not
enough for plan sponsors to outpace rising liabilities—which
increased by 4.0 percent in June, after the EU Referendum vote
shook global markets.
Over the course of the month, corporate discount rates declined
by 25 basis-points, and yielded 3.66 percent, which did little to
curb the surge in liabilities. The U.S. 10-year and 30-year
Treasuries also continued to trade at or near all-time lows with
respect to yields. Year-to-date, for typical U.S. corporate DB
plans, assets are up 6.5 percent, compared to a 13.85 percent
increase in liabilities for plan sponsors. On a 12-month basis,
liabilities have outpaced asset growth by over four-fold,
increasing 16.96 percent versus 4.07 percent, respectively.
According to BNY Mellon estimates, the S&P 500 pension
deficit is now estimated to have increased by $61 billion in June, to $495 billion.
On the public DB side, the typical plan fell short of its
monthly return target of excess returns over a 7.5 percent
annual return by 0.3 percent, even as investors saw an average
return of 0.3 percent on assets. Typical public DB plans are now
down on their year-to-date goal by four basis points, and remain
7.4 percent behind their 12 month target.
Endowments & foundations also missed their monthly target of
real return in excess of inflation and 5 percent spending by
0.3 percent in June. Endowments & foundations are still up 0.8
percent against their year-to-date target, but remain 6.6 percent
behind their 12 month return target, despite asset returns of 0.4
percent in June.
Of the asset classes the scorecard tracks, Long Duration Fixed
Income and REITS were among the best performers in June, returning
4.9 percent and 4.8 percent respectively. Emerging Market Equities
also had a good month, returning 4.0 percent to investors, despite
International Developed Equities falling by 1.5 percent. Both U.S.
Large and Small Cap equities remained mostly flat, returning 0.3
percent and (0.1) percent respectively.
"The U.K.'s decision to leave the European Union certainly
brought some volatility to the market," said Andrew Wozniak, head of BNY Mellon Fiduciary
Solutions. "Global equity markets have rebounded nicely since the
initial sell-off following the vote, but the same cannot be said
about fixed income markets, as yields have remained quite low.
We're seeing that sponsors who have employed liability driven
investing strategies continue to be insulated from these types of
market shock events."
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 March 31, 2016, BNY Mellon had
$29.1 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 March 31, 2016. 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.
Contact: Scott
Pepper
+1
212-635-1743
scott.pepper@bnymellon.com
Logo -
http://photos.prnewswire.com/prnh/20130130/NY50587LOGO-a
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/funded-status-of-us-corporate-pensions-falls-in-june-to-781-percent-according-to-bny-mellon-fiduciary-solutions-monthly-institutional-scorecard-300295406.html
SOURCE BNY Mellon