Penion Funded Status Ends Upward Trend

June 3, 2011 ( - In May, the funded status of the typical U.S. corporate pension plan fell 2.3 percentage points to 86.9%, marking the end of an eight-month upward trend and erasing nearly half of the gains achieved since the beginning of the year.  

Assets in the typical corporate plan fell 0.3% in May, as the U.S. equity markets lost 1.1% and international developed stock markets dipped 3%. The BNY Mellon Pension Summary Report for May 2011 stated that the decline in the funded ratio was driven by falling interest rates as the Aa corporate discount rate dropped 16 basis points to 5.34%. 

“The results in May reinforced the message that serious economic challenges continue to exist in the U.S. and  global markets, which may negatively impact plan funded status,” said Peter Austin, executive director of BNY Mellon Pension Services, in a press release. “With inflation becoming less of a near-term concern, we expect that some plan sponsors will revisit their asset allocation strategy and consider whether now is the time to preserve some of the funding gains achieved between September 2010 and April 2011.”  

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-Sara Kelly