Retirees relying on their pension for income may have been hurt in May by news that the ratio of funded pension plans in the U.S. declined last month.
According to BNY Mellon Asset Management, the funded status of U.S. pension plans fell 2.3 percentage points in May to 86.9 percent. That undid much of the progress in funded pension plans since the start of the year, said the report, and represented a reversal of eight straight months of growth for that measure. Falling interest rates were part of the reason for the decline, said the report.
"The sudden reversal in May reflected the impact of lower Treasury yields as investor concern grew regarding the European sovereign debt situation," said Peter Austin, executive director of BNY Mellon Pension Services. The results in May reinforced the message that serious economic challenges continue to exist in the U.S. and global markets, which may negatively impact plan funded status."
Seniors have expressed uncertainty regarding the status of their pension plan, showing the need for many to protect their financial future with a term life insurance policy.