The funded status of the typical U.S. corporate pension plan fell 1.8 percentage points in April to 80.8% as liabilities rose.
BNY Mellon Investment Strategy & Solutions Group (ISSG) says liabilities were up 4% due to a decline in Aa corporate bond yields, which were off 25 basis points to 3.84%.
Plan liabilities are calculated using the yields of long-term investment-grade bonds, and lower yields result in higher liabilities.
Assets for the typical corporate plan increased 1.7% as equity markets rallied after concerns regarding the banking situation in Cyprus dissipated.
“Interest rates fell as investors expect the Federal Reserve will affirm its commitment to bond purchases in its efforts to spur the economy,” says Jeffrey B. Saef, managing director of BNY Mellon Investment Management and head of the ISSG.