Rough January For Corporate Pensions: Report

The funded status of the typical U.S. corporate pension plan fell nearly 4 percent in January – marking the third consecutive month in which funding status has decreased, according to the BNY Mellon Institutional Scorecard.

[You can view the full scorecard here.]

More from the scorecard:

The funded status of typical U.S. corporate pension plans fell by 3.8 percent in January, to 79.7 percent. The S&P pension deficit is also estimated to have increased by $83 billion, to $411 billion over the month—as assets fell to $1.61 trillion, and liabilities rose to $2.02 trillion. Despite asset returns of negative 5.2 percent over the past year, the funded status of the typical U.S. corporate pension plan have still increased by 2.0 percent over the last 12 months, up from 77.7 percent.

“Plan sponsors are beginning to lose their patience with the onslaught of negative news surrounding their pension plans,” said Andrew Wozniak, head of BNY Mellon Fiduciary Solutions. “Whether it is increased longevity driving liabilities higher, poor investment returns or the negative impact of lump sum payments on their funding percentage, some sponsors are beginning to think that the only solution to their problem is proactively funding their plans.”

Public DB plans and foundations & endowments also performed poorly in January, as they failed to meet the Scorecard’s monthly return targets, by 4.2 and 4.0 percent, respectively. Assets dropped by 3.6 percent for both investor types.

The typical public DB plan is now 12.6 percent behind its one-year return target as assets have, in total, dropped 5.1 percent over that time period. Similarly, foundations & endowments are short of their annual return target by 12.0 percent, despite modest inflation over the past year.

The BNY Mellon Institutional Scorecard tracks the funding of corporate plans, public DB plans and endowments over time.

Photo by Sarath Kuchi via Flickr CC License