The funded status in October of the average U.S. corporate pension plan fell to 89.5 percent, down 0.4 percent from September, according to figures released Wednesday by BNY Mellon's Investment Strategy and Solutions Group.
On Tuesday, Wilshire Consulting released even worse figures, calculating the aggregate funded ratio at only 85 percent and falling in October by 0.3 percent.
Both BNY and Wilshire noted that liabilities increased faster than assets during the month.
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Meanwhile, the Aa corporate discount rate dropped 11 basis points to 4.20 percent over the month, accounting for the corporate plans' higher liabilities. Since plan liabilities are calculated using the yields of long-term investment rate bonds, that meant that lower bond yields brought higher liabilities.
The BNY Mellon Institutional Scorecard indicated that the typical corporate plan saw its assets increase by 1.5 percent while liabilities increased by 1.9 percent during October. Corporate plans' funded status is now down 5.7 percent from the December 2013 high of 95.2 percent, according to the scorecard.
Still, the results could have been more severe. "While the funded status of corporate plans was slightly down for the month, the early part of the month was much worse," said Andrew D. Wozniak, head of fiduciary solutions, ISSG, in a statement. "For the first two weeks, falling stock markets and bond yields drove the funded status down to 84.4 percent on October 15. For the last two weeks of the month, the funded status rebounded 5.1 percent."
On the other hand, public defined benefit plans, endowments and foundations came in ahead of their targets in October thanks to those increasing asset values. ISSG said that public defined benefit plans in October beat their targets by 0.6 percent with an asset increase of 1.2 percent. Still, ISSG added that public plans have trailed their return target by 1.4 percent year over year.
Endowments and foundations saw a real October return of 0.8 percent, while assets returned 1.2 percent. Real estate investment trusts were up by 7.3 percent; they make up 8 percent of the typical asset portfolio. However, foundations and endowments are behind year over year on their inflation plus spending target by 0.9 percent.
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