The funded status of U.S. corporate pensions saw a small increase in July.
According to BNY Mellon Investment Strategy & Solutions Group, their funded status rose 1.6 percentage points to 88.2 percent. Year-to-date, the funded ratio is up 11.1 percentage points.
For U.S. corporate pension plans, the July improvement was driven by a 2.7-percent increase in assets, which was propelled by strong U.S. equity returns. Liabilities for the typical plan increased 0.9 percent as the discount rate on Aa corporate bonds fell four basis points to 4.65 percent.
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Plan liabilities are calculated using the yields of long-term investment grade bonds. Lower yields on these bonds result in higher liabilities.
In the public sector, typical defined benefit portfolios outpaced their annualized 7.5 percent return target, as assets rose 3.3 percent over the month. For the month, the excess return for these plans was 2.7 percent as strong equity market returns were the main drivers for this positive performance. Year-to-date, plan assets are ahead of the return target by 2.6 percent.
Assets for typical U.S. endowments and foundations rose 3 percent in July, outpacing their annual target of 5 percent spending plus inflation.
The BNY Mellon Investment Strategy and Solutions Group is a division of The Bank of New York Mellon.
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