A slumping stock market and a sharp drop in interest rates last month caused a decline of 4.4% in the funded status of a typical U.S. pension plan, says BNY Mellon Asset Management.

“Stocks had their worst month in three years, dropping more than 3%,” explains Peter Austin, executive director of BNY Mellon Pension Services.

“At the same time, long Treasury bond yields declined 22 basis points, significantly increasing the value of pension liabilities.”

Assets of a moderate risk pension portfolio decreased 1.5% in July, while the value of typical pension liabilities rose 2.9%.

Despite the decline, moderate risk assets are up 3.4% while typical pension liabilities are up 0.5% year to date.

To comment on this story, email craig.sebastiano@rci.rogers.com.

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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