Pension plan funding levels among large publicly held U.S. employers dropped to a record low in 2011 as tumbling interest rates and mediocre investment results fueled a rise in the value of plan liabilities, according to a Milliman Inc. survey released March 29.
Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were funded 79.2 percent on average, down from 83.9 percent funded in 2010 and 81.7 percent in 2009. The lowest prior funding level was in 2008 when plans were funded 79.5 percent on average.
On average, the plans earned 5.9 percent on assets last year, down significantly from 12.8 percent in 2010 and 13.9 percent in 2009.
In all, the market value of pension plan assets increased by about $37 billion to about $1.246 trillion in 2011. But the value of plan liabilities leaped by about $133 billion to about $1.573 trillion.
That funding deficit of nearly $327 billion was the biggest in the 12-history of the survey, Milliman said.
Among surveyed employers, Detroit-based General Motors Co. had the largest defined benefit program as measured by assets. In 2011, the automaker had $108.9 billion in plan assets and its plans were 81.1 percent funded, down from 82.6 percent in 2010. However, GM's $25.4 billion difference between its 2011 plan assets and $134.3 billion in benefit liabilities was by far the greatest of any of the 100 employers in the study.
With $86.6 billion in plan assets, Armonk, New York-based IBM Corp. had the second-largest pension program in 2010. Its plans were 89.3 percent funded last year, down slightly from 91.6 percent in 2010, according to the survey.
FPL Group Inc., a Juno, Florida-based energy and utility company, had the highest funded ratio in 2011 at 147.1 percent, down from 162.1 percent in 2010. Atlanta-based Delta Air Lines Inc. had the lowest funded ratio: 40.4 percent, down from 47.1 percent in 2010.
In all, 10 employers in 2011 had plans that were at least 100 percent funded, up from eight in 2010.
On the other hand, 15 employers in 2011 sponsored pension plans that were less than 70 percent funded, compared with just seven in 2010.
Employer plan contributions declined slightly to $55.1 billion last year, down from $60.3 billion in 2010.
By comparison, Milliman said annual plan contributions averaged $39.1 billion over the prior five years.
In conducting the analysis, Seattle-based Milliman analyzed financial reports of publicly held companies sponsoring the 100 largest pension programs for which full-year data was available.