The funded status of the typical U.S. corporate pension plan in March rose 3.6% to 79.8%, according to BNY Mellon Asset Management. The firm attributes the rise to March being the best quarter for U.S. equities in a decade, the sixth straight month to see U.S. stocks rise.
Pensions also benefited from an increase in the Aa corporate discount rate, which resulted in lower liabilities, according to the BNY Mellon Pension Summary Report for March 2012. So far this year, the funded status of the typical corporate plan has increased 7.4%.
Assets for the typical corporate pension plan in March rose 1.3%, while liabilities fell 3.2%, BNY Mellon says. The decrease in liabilities was due to the Aa corporate discount rate rising 25 basis points to 4.58%, according to the report.
“Both the equity markets and interest rates moved in the right direction in March, helping moderate-risk corporate pension plans approach a funding level of 80%,” says Jeffrey B. Saef, managing director, BNY Mellon Asset Management, and head of the BNY Mellon Investment Strategy & Solutions Group. “Further improvements in the funded status could encourage plans to increase their hedge against interest rate moves.”
In February the typical pension rose 2.1% to 76.2%.
(CG)