Rising Corporate Yields Offset 6.7% Decline in Asset Values for Typical Plan

PITTSBURGH, Oct. 7 /PRNewswire-FirstCall/ -- Funding ratios at the typical U.S. pension plan dipped 0.3 percentage points in September as liabilities decreased almost the same amount as the assets of a typical U.S. pension plan with a moderate risk portfolio, according to BNY Mellon Asset Management. For the year to date, funding ratios for typical plans have declined approximately 4.3 percent.

'We find ourselves in an unprecedented environment,' said Peter Austin, executive director of BNY Mellon Pension Services. 'The change in asset and liability values for the month of September was more than what we have historically seen for entire years.'

A 75-basis-point widening in high-grade corporate yield spreads helped to drive typical pension liabilities 6.4 percentage points lower, while the value of the assets in a moderate-risk portfolio decreased 6.7 percentage points in September

'As plan sponsors look ahead, a major concern is the inevitable narrowing of spreads for corporate bonds as we work our way through the credit crisis,' Austin added. 'Falling spreads will increase the value of plan liabilities. Sponsors fear that the narrowing of spreads will not be matched by similar asset appreciation, further deteriorating plan funded status that has already seen a decline of over four percent this year. This will place additional pressure on company balance sheets at a time when recession fears are more prevalent.'

BNY Mellon Asset Management is one of the world's largest global asset managers with more than US$1 trillion in assets under management. The multi-boutique asset management model encompasses the investment skills of world class specialist asset managers who are amongst the most advanced and highly regarded names in money management. With investment expertise that spans the asset class spectrum, BNY Mellon Asset Management offers a comprehensive suite of beta-achieving and alpha-generating investment strategies to meet the unique needs of institutional investors.

The Bank of New York Mellon Corporation is a global financial services company focused on helping clients manage and service their financial assets, operating in 34 countries and serving more than 100 markets. The company is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has more than $23 trillion in assets under custody and administration, more than $1.1 trillion in assets under management and services $12 trillion in outstanding debt. Additional information is available at bnymellon.com.

SOURCE The Bank of New York Mellon Corporation