The funding ratio of the average U.S. corporate pension plan fell 0.4 percentage points in October to 79.9%, spurred by a decline in U.S. stock values, according to an analysis by BNY Mellon Asset Management.
Assets decreased an average 1.2%, while liabilities declined 0.6%.
The funding ratio was up 6 percentage points, year-to-date Oct. 31.
Peter Austin, executive director of BNY Mellon Pension Services, said in an interview that a 2.6% decline in U.S. stocks and a 1.2% drop in international stocks reflect investor concerns about the strength of the economic recovery. The negative returns, however, were partially offset by a slight increase in the Aa corporate discount rate, which caused liabilities to decline slightly.
“Companies have seen improvements in the funded status of their plans,” Mr. Austin said. “Now the focus is on where are interest rates going. Many sponsors are relying on equity markets recovering to improve the funded status of their plan.”
