Best Level in Nearly Two Years

NEW YORK, June 4, 2013 — The funded status of the typical U.S. corporate pension plan rose 5.6 percentage points in May 2013 to 86.4 percent, the highest level since July 2011, according to the BNY Mellon Investment Strategy & Solutions Group (ISSG). Year to date, the funded ratio is up 10.1 percentage points, ISSG said.

The improvement was driven by a jump in the Aa corporate discount rate, which drove liabilities sharply lower, according to the BNY Mellon Pension Summary Report for May 2013. Liabilities for the typical corporate plan fell 6.3 percent as the discount rate on the Aa corporate bonds increased 46 basis points to 4.30 percent, the sharpest rise in nearly two years, 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.

Assets for the typical corporate plan increased 0.2 percent as U.S. equity markets rose, the report said.

"Signs that the quantitative easing program will end coupled with rising consumer confidence are making bonds less attractive, which is sending interest rates higher," said Jeffrey B. Saef, managing director, BNY Mellon Investment Management, and head of the ISSG. "Corporate plans are in much better shape and expressing increasing interest in strategies that could protect them from future funded status volatility."

The BNY Mellon Investment Strategy and Solutions Group is a division of The Bank of New York Mellon.

BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.4 trillion in assets under management. It encompasses BNY Mellon's affiliated investment management firms, wealth management services and global distribution companies. More information can be found at http://www.bnymellon.com/.

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 36 countries and more than 100 markets. As of March 31, 2013, BNY Mellon had $26.3 trillion in assets under custody and/or administration, and $1.4 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com, or follow us on Twitter @BNYMellon.

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