The funded status of U.S. pension plans declined 0.9 percentage points in August, with a 1.7-percentage-point growth in pension liabilities outpacing a 0.8-point increase in pension assets, according to a report today from BNY Mellon Asset Management.
Longer-term corporate yields were down approximately six basis points (last month), and that helped drive liabilities higher, Peter Austin, executive director at BNY Mellon Pension Services, said in a statement about the analysis. While lower energy and commodity prices helped to send stocks higher, they could not keep up with the rise in liabilities.
Funded status as measured by BNY Mellon fell four percentage points for the year to date through the end of August and could face continued pressure into next year, the report said.
The Federal Reserve hinted that it will continue its accommodative monetary policy into 2009, which should keep rates at current levels, Mr. Austin said in the statement. This suggests there will be little relief on plan funded status from liabilities, so any improvement in the funded status of these plans will have to come from asset returns.