Mellon: Pension Plan Funding Drops 3.4% in February

March 5, 2007 ( - The funded status of a typical U.S. pension plan fell by 3.4% in February, following an uptick of 2.4% the month before, according to the Mellon Pension Liability Indexes.

Peter Austin, Executive Director of Mellon Pensions Services, said in a press release that the drop was partly due to the stock market downdraft of February 27.   “Funding status of the typical plan was improving this year until the big decline in the equity markets reversed those gains,” Austin said. “The simultaneous drop in rates and equity markets highlights the risk of mismatching assets and liabilities.”

This decline marks a change in direction from the previous month where the funding status showed improvements (See  Pension Funding Status Ticks up in January ).

The value of pension assets dropped by 0.1% in February, while liabilities increased by 3.3% for the typical plan.

For the first two months of the year, the funding of a typical U.S. pension plan has declined by approximately 1% as a 1.8% increase in liabilities outpaced a 0.9% increase in assets.

For the full index report for February 2007 go here