Stock Market Downdraft and Interest Rate Decline Hit Funding Status of U.S. Pension

PITTSBURGH, August 8, 2007 — A slumping stock market and a sharp drop in interest rates in July caused a decline of 4.4 percentage points in the funded status of a typical U.S. pension plan, according to BNY Mellon Asset Management, which tracks the health of U.S. pension plans through its BNY Mellon Pension Liability Indexes. Despite the severity of the July decline, the typical plan had improved its status by nearly three percentage points during the first seven months of the year.

"Stocks had their worst month in three years, dropping more than three percent," according to Peter Austin, executive director of BNY Mellon Pension Services. "At the same time, long Treasury bond yields declined 22 basis points, significantly increasing the value of pension liabilities."

Assets of a moderate risk pension portfolio decreased 1.5 percent in July, while the value of typical pension liabilities rose 2.9 percent. For the year to date, however, moderate risk assets are up 3.4 percent while typical pension liabilities are up 0.5 percent. Lower interest rates increase liabilities and the value of bonds.

Unexpected changes in a plan's demographics, among other factors, also affect the size of the benefit liability. The BNY Mellon Pension Liability Indexes, which were launched in March 2006, are designed to track the market values and returns of pension liabilities for young, average and mature pension plans. (See more about the indexes at http://www.melloninstitutional.com/public/knowledge/publications/
content/publications/liability_index.html.)

BNY Mellon Asset Management is a leading global provider of investment management products and services that offers a broad range of equity, fixed-income, hedge and liquidity management products through individual asset management companies and multiple distribution channels.

The Bank of New York Mellon Corporation is a global financial services company focused on helping clients manage and move their financial assets, operating in 37 countries and serving more than 100 markets. The company is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services and treasury services through a worldwide client-focused team. It has more than $20 trillion in assets under custody and administration and more than $1 trillion in assets under management. Additional information is available at www.bnymellon.com.