A Mellon press release said liabilities rose 3.5% in August, more than the 2.1% rise in the value ofassets at a typical moderate risk benchmark portfolio.
“Capital markets increasingly are concerned about a slowing economy while fears of inflation have eased,” said Peter Austin, executive director of Mellon Pension Services, in the release. “The combination has brought long-term interest rates down 40 basis points since the end of June. While asset values have benefited, the market value of pension liabilities has grown even more.”
Though pension plans’ funded status has declined for three consecutive months, the funded status of a typical plan was still more than 6% better at the end of August than it was at the beginning of the year. Mellon attributes this fact primarily to interest rate increases during the first five months of the year.
The assets of a typical plan were 5.1% higher at the end of August than they were at the beginning of the year, while liabilities were 1.2% lower.
More about the Mellon Pension Liability Indexes can be found here .