Pension Plan Funding Status Dips in March

Public plans and foundations and endowments also saw assets decrease.

The funded status of the typical U.S. corporate pension plan declined 0.4 percentage points in March to 87.2%, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG).  

The BNY Mellon Institutional Scorecard showed that for the typical U.S. corporate plan, assets in March decreased 0.5%, while liabilities fell 0.1% as the Aa corporate discount rate rose two basis points to 3.86%. 

The funded status is 4.9 percentage points lower than at this time last year and 0.1 percentage points lower than at the beginning of the year.

”March was a lackluster month for most markets, with little fluctuation in asset values,” says Andrew D. Wozniak, head of fiduciary solutions, ISSG.  “However, volatility increased as investors anticipate a shift in U.S. monetary policy.  Higher rates would reduce liabilities, although investors would have to decide where to allocate assets so they are best positioned in the new interest rate environment.”

Public plans, endowments and foundations missed their targets for the month, as most asset classes lost value. Public defined benefit plans missed their return target by 1.3% as assets had a negative return of 0.7%, according to the monthly report. Year over year, public plans remain below their return target by 2.7%.

For endowments and foundations, the real return in March was -1.1% as assets returned -0.9%. Year over year, endowments and foundations are behind their inflation plus spending target by 2.0%, ISSG said.