The funded status of typical U.S. corporate pension plans fell 0.1 percentage points to 88.1% in August according to the BNY Mellon Investment Strategy & Solutions Group (ISSG).
Corporate pension plans, public pension plans, and endowments and foundations in the U.S. all lost ground financially in August as rising interest rates led to lower values for most asset classes.
Despite the lower asset values, corporate pension plans benefited from the rising rates as they pushed liabilities lower. Year to date, the funded ratio for the corporate plans is up 11 percentage points.
“Market volatility and rising interest rates contributed to lower assets for all three institutional categories,” says Jeffrey B. Saef, managing director with BNY Mellon Investment Management and head of the ISSG.
“Endowments and foundations benefited from their 22% allocation to hedge funds and absolute return strategies, which helped buoy plan assets,” he adds. “Public plans were hurt by their relatively high allocation to equities, which comprised more than half of the typical U.S. public plan portfolio.”
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