The funded status of a typical corporate defined benefit pension plan was relatively flat in August, decreasing 0.1 percentage point to 88.1%, according to the BNY Mellon Institutional Scorecard.
Liabilities fell 1.5% for the month, but a 1.6% drop in assets resulted in little overall change. The discount rate increased 13 basis points to 4.78%. All major asset classes saw a negative return for the month.
Jeffrey Saef, managing director and head of the investment strategy and solutions group at BNY Mellon Investment Management, said the “pause” in funded status improvement was not surprising. Plan executives continue to be pleased with rapid improvement, he added, as the funded status stood at 80.7% at the end of April.
“July was a significant run-up for equity prices” that was not going to be sustained in August, Mr. Saef said in a telephone interview.
A typical public pension fund experienced a similar month to its corporate brethren as assets fell 1.6%, according to the report. However, plan assets are 20 basis points ahead of the 7.5% return target year-to-date and up 230 basis points in the last 12 months.
Typical foundation and endowment assets decreased 1.5% in July, largely due to a higher allocation to hedge funds, which did not perform as poorly. Assets are up 9.4% in the 12 months, outperforming the spending-plus-inflation target by 280 basis points.
