A significant decline in discount rates led to a record funding deficit in pension plans, approximately $327 billion, according to Milliman's just-released 2012 Pension Funding Study.
The deep slide, $94.7 billion more than the numbers generated at the end of 2010, is the largest deficit ever recorded in the 12-year history of Milliman's study, and is largely attributable to an equally historic year-end discount rate of 4.80 percent.
Pension expenses also came in at a record level of $38.3 billion, a $7.8 billion jump from the previous year. That charge to earnings was also the highest in the history of the study.
The discount rate, based on year-end SEC disclosures, reflects low federal interest rates and low bond yields, which Milliman predicts will continue through 2014. Its projections for 2012 call for pension expenses to exceed $54 billion and pension contributions to reach a record $80 billion.
As part of negotiations included in the national highways bill, Congress is considering legislation what would reduce required contributions for 2012 and beyond.
The move has been applauded by a consortium of groups representing major US companies, many of whom believe they could better use their pension contributions to create jobs than cache money in a low-interest-rate climate.
The study, which is based on the year-end financial statements of the Milliman 100 companies, made up of the public companies with the largest defined benefit pension plan assets. Combined, the total value of their pension assets was $1.246 trillion at the end of 2011.