The funding ratios of the typical U.S. pension plan dropped six percentage points in February, largely because of asset value declines tied to falling equity markets, according to the BNY Mellon Pension Liability Index.
Funded ratios for the plans have fallen 32.3 percentage points since the beginning of 2008, according to the index.
Moderate-risk assets fell 6.4% in the month, while liabilities for the plans decreased 0.6%
Rapidly falling equity values continue to inflict pain on U.S. pension plans, Peter Austin, executive director of BNY Mellon Pension Services, said in a news release. Pension plans had some very minor relief from the widening of corporate bond spreads, which drove the small drop in liabilities.
Mr. Austin added that a threat remains if corporate bond spreads were to narrow and, consequently, corporate bond yields fell leading to a rise in pension plan liabilities.
Pension plans remain hopeful that higher equity values will help asset levels and improve funded status, Mr. Austin said. With considerable skepticism regarding such a rally, we see continuing interest from plans seeking to manage their exposure to pension liabilities.