The funding ratio of the typical U.S. corporate defined benefit pension plan fell to 92.1% in March, down 50 basis points from the previous month, according to the BNY Mellon Institutional Scorecard.
The funding drop is the result of liabilities increasing 0.7%, while assets had relatively flat investment returns of 0.3% in the typical corporate DB plan.
The uptick in liabilities comes as the Aa corporate discount rate fell two basis points to 4.56% in March.
March was relatively uneventful from an asset class return perspective,” said Andrew Wozniak, director, portfolio management and portfolio strategy at BNY Mellon Investment Management, in a telephone interview. “Most of the asset classes we monitor recorded flat returns.”
The drop in funding ratio brings the typical plan down a total of 3.1 percentage points from a high of 95.2% at the end of December.
“In March, we saw the underperformance of 2013 market darlings (such as) biotech (and) Internet stocks,” Mr. Wozniak said, “and we’re asking ourselves are investors losing their appetites for these?”
Mr. Wozniak said the firm is looking ahead to the second quarter, looking to perhaps a weather-related reversal and the possibility that inflation is around the corner.
Also, according to the scorecard, the typical public defined benefit pension plan returned 0.1% in March, while the typical foundation and endowment returned -0.1%
