Despite a stock market rally last month, U.S. retirement funds held steady, according to an asset management corporation.
The BNY Mellon Pension Liability Index, put forward by the Bank of New York Mellon Asset Management, calculated that assets and liabilities for the average moderate risk U.S. corporate pension plan rose 5.4 percent in July. As a result, the funded status of the typical plan remained unchanged at 79.2 percent for the month.
"While U.S. stocks returned nearly eight percent and international stocks were up more than nine percent in July, these big gains were only enough to offset the rise in liabilities that plans face," says Peter Austin, executive director of BNY Mellon Pension Services.
"This rise in liabilities was due to the decline in the discount rate on Aa corporate bonds to 5.88 percent from 6.28 percent at the end of June," he adds.
The index further suggests that through July 31, 2009, the funding ratio for an average plan is up 5.3 percentage points from 73.9 percent at December 31, 2008.
The Bank of New York Mellon Corporation is a financial services company operating in 34 countries. It has $20.2 trillion in assets under custody and administration, $928 billion in assets under management, services more than $11 trillion in outstanding debt and processes global payments averaging $1.8 trillion per day.