Pension Plans See Strongest Gain for Year in September

October 7, 2010 ( - September produced the strongest one-month gain this year in funding status for the typical U.S. corporate pension plan, which moved 4.6 percentage points higher to 75.9%, according to BNY Mellon Asset Management.

For the month of September, assets for the typical plan increased 5.7% as U.S. equity markets rose 9.4% and international stocks increased 9.8%, according to the BNY Mellon statistics.  The pension plans also benefitted from a small increase in the Aa corporate discount rate to 4.98% from 4.92% at the end of August.

This increase in the discount rate sent the liabilities for the typical plan down 0.7%, according to the BNY Mellon Pension Summary Report for September 2010.  

Pointing out that August market and interest rate activity left the typical plan in its worst position since 2005, Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management, noted in a press release: “Despite this significant market rally, the typical plan’s funded status finished September 7.6 percentage points lower than it was at the beginning of the year.”    

He added: “Establishing a long-term pension risk management framework that includes traditional liability driven investing (LDI) strategies and/or dynamic asset allocation is a path that sponsors are finding helpful in these challenging economic times.”