Pension Plan Funding Status Takes a Dive in October

November 6, 2008 ( - Funding ratios at the typical U.S. corporate pension plan fell 3.7% in October, according to BNY Mellon Asset Management.

For the year to date, funding ratios for typical plans have declined approximately 7.7%, BNY Mellon said in a press release.

“Renewed recession fears weakened an already fragile market, as the value of the assets in a moderate-risk portfolio declined 11.8 percentage points in October,” said Peter Austin, executive director of BNY Mellon Pension Services, in the announcement. According to Austin, the drop in asset values was partially offset by a 7.3% drop in typical plan liabilities, due to the Pension Protection Act average discount rates rising 76 basis points.

“This was the largest decline in funded status for a single month since we started tracking pension funding in March 2005,” Austin said.  “Plan sponsors need to be vigilant in monitoring their pension funding as we expect more volatility in the near term.”