U.S. Pension Plan Health Dips Slightly

September 7, 2007 (PLANSPONSOR.com) - U.S. pension plan funding slipped by 0.9% in August, mostly fueled by a decline in Treasury bond yields, according to the latest figures from the BNY Mellon Pension Liability Indexes.

Lower interest rates increase liabilities and the value of bonds. The declining yields led to a 2% increase in the typical plan’s liabilities, versus a 1.1% increase in the assets of a typical moderate risk portfolio, a ccording to a news release.

The funded status is better than it was at the beginning of the year, with moderate risk assets up 4.5%, compared to a 2.5% increase in liabilities.

“The continuing liquidity difficulties in the fixed income market during August once again brought a flight to quality,” said Peter Austin, executive director of BNY Mellon Pension Services, in a statement. “Treasury yields dipped an average of 12 basis points, increasing the value of pension liabilities. U.S. stocks recovered half of the losses they incurred during July, but international stocks were once again weak.”

For the full results of the report go here .