Funded Status of U.S. Pensions Falls to Record Low


October 5, 2011 ( – The funded status of the typical U.S. corporate pension plan fell 7.9 percentage points in September to 70.1%, reports BNY Mellon Asset Management. 


According to BNY Mellon, this is the lowest level since it began tracking this data in 2006.

For the month of September, assets for the typical corporate plan fell 4.5% and liabilities increased 6.2%, according the BNY Mellon Pension Summary Report for September.  The asset decline reflected the third month in a row of falling equities, while the rise in liabilities was tied to the 40-basis-point decline of the corporate discount rate to 4.54%, the report said.

“Concerns about the sluggish economy, the European sovereign debt issues and the U.S. budget issues have all contributed to growing investor pessimism,” said Jeffrey B. Saef, Managing Director, BNY Mellon Asset Management, and head of the Investment Strategy & Solutions Group.  “As a result, they continue to flee equities and other risky assets and have increased their allocations to Treasuries.”

He added, “The funded status of corporate plans has fallen dramatically since June. With interest rates falling to historically low levels, a sustained rally in the equity markets will be needed for the funding levels to recover.”