Pension Funding Sees 8th Consecutive Month of Improvement

May 5, 2011 ( - The funded status of the typical U.S. corporate pension plan in April rose 0.7 percentage points to 89.2%, the eighth consecutive month of improvement, according to BNY Mellon Asset Management.
The BNY Mellon Pension Summary Report for April 2011 shows the funding ratio for the typical corporate plan has improved 4.9 percentage points since the beginning of the year.

Rising stock markets in the U.S. and around the world lifted assets for the typical corporate pension plan in April by 2.6%, outpacing the 1.8% rise in liabilities, according to the report.  BNY Mellon attributes the liability increase to the decline in the Aa corporate discount rate to 5.50% from 5.61%.

“An increasing number of plan sponsors are evaluating their prospects to further improve their funded status through return-seeking assets, such as alternatives and equities,” said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management, in a press release. “However, they are maintaining a clear focus on preserving the funding gains that have been captured over the last eight months.  The question most frequently asked is whether now is the time to increase the liability hedge given interest rate trends.”