BNY Mellon: US Corporate Pension Funded Status Plummets to Lowest Level Since 2007

(June 7, 2012) – A brutal month has caused the funded status of the average corporate pension plan in the United States to decline 6.5% to reach 69.8%, its lowest level since BNY Mellon began recording the information in December 2007.

A plunging equity market and increasingly lower interest rates fueled the drop, according to the report. It found that assets fell 3.9% in May for the typical US corporate pension plan, as US equity markets plummeted 6.2% and international developed markets tanked 11.5% during the month.

Liabilities for US corporate plans also rose 5.1% as the Aa Corporate discount rate fell 31 basis points in May to a record low of 3.98%, the report said.

“After a strong first quarter, investors are again focusing on continuing weakness in European markets and lack of a coordinated long-term solutions to the debt issues, just as they did in 2011,” Jeffrey B. Saef, managing director with BNY Mellon Asset Management and head of the BNY Mellon Investment Strategy & Solutions Group, said in a release. “Until investors have more clarity, we are likely to see continuing weak equity markets and low interest rates.”