The funded status of the typical U.S. corporate pension plan increased 1.4 percentage points in June 2014 to 92%.
The reason? Rising asset values, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG).
“Corporate plans also benefited from a slight rise in interest rates, which reduced liabilities,” says Andrew D. Wozniak, head of fiduciary solutions with ISSG. “June ended a string of three consecutive months of falling rates, which had been driving liabilities higher.”
The BNY Mellon Institutional Scorecard for June notes that assets at the typical corporate plan rose 1.4% and liabilities decreased 0.2% during the month.
Year to date, the funded status of corporate plans is down 3.2 percentage points, according to the scorecard.
Public DB plans, endowments and foundations also benefited from strong asset returns and exceeded their return targets, ISSG notes.
“Equities have continued rallying since April as economic data appears to indicate strengthening global growth,” he says. “If the funded status continues to rise, we expect more plans to implement strategies that better insulate them from future market volatility.”
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