Pension Plan Funding Ratio Inches up in March

April 5, 2011 ( - The funded status of the typical U.S. corporate pension plan in March inched up 0.5 percentage points to 88.5%, monthly statistics published by BNY Mellon Asset Management show.

Although the gain in March was small, this was the seventh straight month of improvement, according to the BNY Mellon Pension Summary Report for March 2011 (see Pension Funding Continued Upward in February). So far this year, the funding ratio for the typical corporate plan has improved 4.2 percentage points.

Assets for the typical corporate pension plan were unchanged in March, as the 0.5% increase in U.S. equity markets was offset by a 2.2% decline in international developed markets.  Liabilities decreased 0.5% during the month as the Aa corporate discount rate increased from 5.54% to 5.61%, the report noted. 

Peter Austin, executive director of BNY Mellon Pension Services said in a press release that many plans are weighing the advantages of implementing risk reduction strategies through higher bond allocations that reduce future funding volatility versus pursuing additional returns through equities, alternatives and other return-seeking asset classes to further improve their funded status in a rising rate environment.