US - Pension plans lost ground in June as their liabilities increased 1% due to lower interest rates, Mellon Financial Corporation has found.
The drop came in stark contrast to the first six months of the year, when the funded status of a typical plan improved nearly 9%.
According to Mellon, the liabilities of a typical pension plan fell 6.5% through June 2006 due to higher interest rates, while assets of a moderate-risk benchmark portfolio increased 2.3% over the same period.
The steady rise in interest rates during the year was interrupted in June as investors anticipated a near-term end to the Fed's tightening, said Peter Austin, executive director of Mellon Pension Services.
“These factors halted the decline in liabilities that we had seen during the first five months of the year, he said.
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