The typical U.S. pension plans funded status grew 0.6 percentage points in July, when the decline in liabilities outpaced the drop in assets, according to BNY Mellon Asset Management.
Liabilities fell 1.4 percentage points while asset returns of a moderate-risk portfolio fell 0.8 percentage points. As investors continued their flight to quality, yields on high-grade corporate bonds increased.
This months results reflect a significant improvement over Junes 4.8% decline in funding ratios, but we havent seen the end of funding volatility, said Peter Austin, executive director of BNY Mellon Pension Services, said in a news release. Corporate spreads remain extremely wide, and as the markets begin to settle and corporate spreads narrow, we may see a further decline in funding ratios.
The funding ratio of the typical pension plan for the first seven months of 2008 has declined 3.0%.