Funded Status of U.S. Corporate Pensions Diped Slightly in March, According to BNY Mellon ISSG
Public plans, endowments and foundations missed their targets for the month, as most asset classes lost value, according to the BNY Mellon Institutional Scorecard.
For the typical U.S. corporate plan, assets in March decreased 0.5 percent; while liabilities fell 0.1 percent as the Aa corporate discount rate rose two basis points to 3.86 percent.
Plan liabilities are calculated using the yields of long-term investment grade bonds. Higher yields on these bonds result in lower liabilities.
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," said 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 defined benefit plans in March missed their return target by 1.3 percent as assets had a negative return of 0.7 percent, according to the monthly report. Year over year, public plans remain below their return target by 2.7 percent, ISSG said.
For endowments and foundations, the real return in March was -1.1 percent as assets returned -0.9 percent, ISSG said. Year over year, endowments and foundations are behind their inflation plus spending target by 2.0 percent, ISSG said.
The BNY Mellon Investment Strategy and Solutions Group is a division of The Bank of New York Mellon.
BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with \$1.7 trillion in assets under management. It encompasses BNY Mellon's affiliated investment management firms, wealth management services and global distribution companies.
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