The funding ratio of the typical U.S. corporate pension plan declined 4.3 percentage points in May to 82%, largely because of falling stock values, according to an analysis by BNY Mellon Asset Management.
The decline makes it the worst monthly funding ratio since October 2009, the company said in a news release.
The funded status for the typical U.S. corporate pension plan is down 3.5% for the year.
While declining stocks hurt plan assets, liabilities changed little, increasing only 0.3%.
Peter Austin, executive director of BNY Mellon Pension Services, a unit of BNY Mellon Asset Management, said in a telephone interview that U.S. and international stocks dropped dramatically in May, wiping out equity gains on a year-to-year basis. The BNY Mellon news release notes that U.S. stocks dropped nearly 8% in May and the weakened euro sent international stocks down more than 11%.
“The markets are still very jittery and fragile, and any action can cause a dramatic swing,” Mr. Austin said.
He said the May 6 U.S. market plunge also illustrates the sensitivity of equity markets, and the European sovereign debt crisis and the fragility of the global economic recovery are expected to increase market volatility in the near term.