October DB Plan Funded Status at 80.3%

November 3, 2010 (PLANSPONSOR.com) – A second straight month of strong equity returns combined with declining liabilities drove the October 2010 funded status for the typical U.S. corporate pension plan 4.4% higher to 80.3%.

A BNY Mellon Asset Management news release said that was the best status since May 31, 2010.

According to the BNY Mellon data, assets for the typical plan rose 2.5% in October, as U.S. equity markets increased 3.9% (Russell 3000 Index) and international stocks rose 3.6% (MSCI-EAFE Index).  The increase in the Aa corporate discount rate to 5.23% from 4.98% resulted in a 3.2%-decline in the typical plan’s liabilities.

“Back-to-back months of strong equity performance and a rising discount rate have provided much needed relief to U.S. corporate pension plans,” said Peter Austin, executive director of BNY Mellon Pension Services, in the announcement.  “Over the last two months the typical plan has experienced a nine percentage-point improvement in funded status, which is significant. But we should keep in mind that we were working off the lowest funded status recorded since we started reporting in 2005 and overall funding remains historically low at just above 80%.”