According to the BNY Mellon Investment Strategies & Solutions Group (ISSG), for the month of December, the funded status for the typical plan increased 1.9% to 76.3%. The BNY Mellon Pension Summary Report for December 2012 noted that, for the year, the funded status was up 1.0%.
Assets for the typical plan in December rose 0.9% as equities markets climbed. Liabilities fell 1.7% as the Aa corporate discount rate rose 13 basis points to 3.89%, 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.
“Plans benefited over the last six months as the discount rate has been slowly rising, leading to a decrease in liabilities,” said Jeffrey B. Saef, managing director, BNY Mellon Investment Management, and head of the ISSG.
“At the same time, equities held on to the gains achieved earlier in the year, leading to the positive performance for all of 2012.”
