Funding Status of Typical Corporate Plan Reaches Best Level since May

BOSTON, December 4, 2009 — U.S. stocks rose 5.7 percent in November, contributing to a 2.6 percentage-point improvement in the funded status of the typical U.S. corporate pension plan, according to monthly figures published by BNY Mellon Asset Management. The funded status of the typical plan improved to 82.5 percent at the end of November, which was the highest level since May, and up from 79.9 percent at the end of October, according to the BNY Mellon statistics.

Assets for the typical U.S. corporate plan rose 3.6 percent, outpacing the 0.2 percent gain in liabilities during the month, which reflected interest accruals as the discount rate for November was unchanged from October. For the year, through November 30, the funding ratio for the typical plan is up 8.6 percentage points, as represented by the BNY Mellon Pension Liability Index.

"U.S. corporate pension plans continued their road to recovery as domestic and international equity markets registered strong results," said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management. "Equities have rallied in eight of the last nine months and have been the driving force for the funding improvement. Liability discount rates are only 14 basis points lower for the year, which has limited the impact on pension plan liabilities. Plan sponsors that maintained their equity allocations, which hasn't been easy given market volatility, have been rewarded for their commitment to their strategic asset allocation."

Plan liabilities are calculated using the yields of long-term investment grade corporate bonds. Lower yields on these bonds result in higher liabilities.

"With funding levels near 2009 highs and 2010 financial planning underway in many organizations, there is increased interest in discussing pension risk reduction programs," said Austin. "These programs would include new or increased allocations to liability driven investing (LDI) strategies. Plan sponsors remain fearful of plan surplus/deficit volatility, which remains a relevant topic given the fragility of the global markets."

BNY Mellon Asset Management is the umbrella organization for BNY Mellon's affiliated investment management firms and global distribution companies.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 34 countries and serving more than 100 markets. BNY Mellon 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, clearing services and treasury services through a worldwide client-focused team. It has $22.1 trillion in assets under custody and administration and $966 billion in assets under management, services $11.9 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. Additional information is available at www.bnymellon.com.

All information source BNY Mellon Asset Management as of September 30, 2009, except where noted. This press release is issued by BNY Mellon Asset Management to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance.