BNY Mellon Finds March Was a Good Month for Pensions

April 6, 2009 ( - A stock market rally and wider spreads for corporate bonds combined to improve the funding status of a typical U.S. corporate pension plan by 6.4% in March, according to BNY Mellon Asset Management.

Assets for a typical moderate risk portfolio jumped 5.6%, while liabilities fell 3.5% during the month, according to a BNY Mellon press release.  For the year to date, the funding ratio for the typical plan is now up 5.7%, as represented by the BNY Mellon Pension Liability Index.

“This was, by far, the best month for pension plans since the funding status of these plans began deteriorating in May 2008,” said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management, in the announcement.

However, Austin warned that the help pensions are receiving from corporate bond yields isn’t expected to last. “With corporate bond yields well over their historic levels, we expect them to drop over time, which would increase the liabilities for these plans.  If that were to happen, pension plans will need either more help from the equity markets or increasing skills in managing their exposure to pension liabilities,” he said.