The funding status of a typical U.S. pension plan dropped by 3.4 percentage points in February because of last week’s stock market tumble, according to Mellon Financial.
Last month, the value of assets declined by 0.1% while liabilities increased 3.3%. The rise in liabilities was driven by a 30- to 35-basis-point decline in interest rates.
“Funding status of the typical plan was improving this year until the big decline in the equity markets reversed those gains,” says Peter Austin, executive director of Mellon Pension Services. “The simultaneous drop in rates and equity markets highlights the risk of mismatching assets and liabilities.”
For the first two months of the year, the funding of a U.S. plan has declined by about 1%.
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