The funded status of the typical U.S. corporate pension plan increased 1.4 percentage points in June 2014 to 92%, driven by rising asset values, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG).

"Corporate plans also benefited from a slight rise in interest rates, which reduced liabilities," said Andrew D. Wozniak, head of fiduciary solutions, ISSG. "June ended a string of three consecutive months of falling rates, which had been driving liabilities higher."

The BNY Mellon Institutional Scorecard for June notes assets at the typical corporate plan rose 1.4 percent and liabilities decreased 0.2 percent during the month.

Year to date, the funded status of corporate plans is down 3.2 percentage points, according to the scorecard.

Public defined benefit plans, endowments and foundations also benefited from strong asset returns and exceeded their return targets, ISSG said.

"Equities have continued rallying since April as economic data appears to indicate strengthening global growth," said Wozniak. "If the funded status continues to rise, we expect more plans to implement strategies that better insulate them from future market volatility."

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Enter your work email
First Name
Last Name
Company Name
Job title *
Phone number *
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The decrease in liabilities for corporate plans in June was due to a 4-basis-point increase in the Aa corporate discount rate to 4.32 percent, the report said. Plan liabilities are calculated using the yields of long-term investment grade bonds. Higher yields on these bonds result in lower liabilities.

On the public side, defined benefit plans in June exceeded their target by 1.0 percent as assets led by small cap equities and private equity rose. Year over year, public plans exceeded their target by 9.0 percent, ISSG said.

For endowments and foundations, the real return in June was 1.0 percent, exceeding the target for spending plus inflation, ISSG said. This outperformance was driven largely by their exposure to private equity, which accounts for approximately 15 percent of the typical portfolios for endowments and foundations. Year over year, foundations and endowments are ahead of their target by 8.2 percent.