Higher bond yields offer some relief to U.S. pensions: Wilshire

November 3, 2016 10:39 AM EDT

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NEW YORK (Reuters) - U.S. corporate pensions benefited from the rise in bond yields in October, but their ability to generate income to meet future payouts to retired workers remained below year-ago levels, Wilshire Consulting said on Thursday.

The aggregate funding ratio of the company pensions Wilshire tracks rose by 0.5 percentage point in October to 77.5 percent, reducing its calendar year-to-date decline to 3.9 points.

A year ago, this measure, which rises with the pensions' ability to pay retirees, was 84.1 percent.

"Asset values fell due to negative returns for most asset classes during the month. The fall in asset values was more than offset by the fall in liability values resulting from the significant rise in bond yields during the month," Ned McGuire, vice president at Wilshire Consulting, said in a statement.

Wilshire, based in Santa Monica, California, consults on investments for corporate and public pensions with combined assets of nearly $1 trillion.

Asset values, including those of stocks and bonds in the pensions, fell by 2.3 percent in October, while liabilities - or payouts promised to retired workers - fell by 2.9 percent, Wilshire said.

Last month's drop in pension asset and liability values stemmed partly from a rise in bond yields, with the benchmark 10-year Treasury yield rising 23 basis points for its steepest monthly increase since June 2015, according to Reuters data.

The S&P 500 index produced a 1.82 percent loss in October, its biggest drop since February.

(Reporting by Richard Leong; Editing by Dan Grebler)

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