Corporate Pensions’ Funded Status Fell for Third Month in January

U.S. Corporate pension plans’ funded status dropped by 3.8% in January to 79.7%, BNY Mellon reported Monday.

The S&P pension deficit of companies with defined benefit plans was also estimated to have increased by $83 billion to $411 billion over the month as assets fell to $1.6 trillion, and liabilities rose to more than $2 trillion, according to the BNY Mellon Institutional Scorecard.

Despite asset returns of -5.2% over the past year, the typical U.S. corporate pension plan’s funded status has increased by two percentage points over the last 12 months, up from 77.7%.

“Plan sponsors are beginning to lose their patience with the onslaught of negative news surrounding their pension plans,” Andrew Wozniak, head of BNY Mellon Fiduciary Solutions, said in a statement.

“Whether it is increased longevity driving liabilities higher, poor investment returns or the negative impact of lump sum payments on their funding percentage, some sponsors are beginning to think that the only solution to their problem is proactively funding their plans.”

Both public defined benefit plans and foundations and endowments also performed poorly in January, failing to meet the Scorecard’s monthly return targets by 4.2% and 4%, respectively. Assets dropped by 3.6% for both investor types.

Public DB plans got a boost from global fixed income, but were hurt by allocations to small cap and private equity, which lost 8.8% and 7.7%.