The funded status of a typical U.S. corporate defined benefit pension plan declined in April due to rising liabilities and modest asset returns, according to a report from BNY Mellon Investment Management.
The funded status for a typical corporate DB plan decreased to 91% in April, down 1.1 percentage points from the previous month, according to the BNY Mellon Institutional Scorecard.
The funding drop is the result of liabilities increasing 2.1%, while assets had modest investments returns of 0.9%.
The rise in liabilities is the result of the discount rate falling 13 basis points to 4.43% in April.
The drop in funded status brings the typical corporate DB plan down a total of 4.2 percentage points from a high of 95.2% at the end of December.
“From an assets-only perspective, corporate defined benefit plans edged out endowment investors in April,” said Andrew Wozniak, director, portfolio management and portfolio strategy at BNY Mellon Investment Management, in a telephone interview.
The typical endowment and foundation returned 0.4% on its assets in April, missing the monthly target of inflation plus 5% spending Mr. Wozniak said. This underperformance was primarily due to a 2.3% decline in private equity.
However, Mr. Wozniak noted that public defined benefit plans had a “favorable” month, meeting their monthly return target of 0.6%.