Declining discount rates in 2011 drove the pensions of the Milliman 100 companies to a record year-end 2011 funding deficit of $326.8 billion—a $94.7 billion increase over the year-end 2010 funding deficit of $232.1 billion. It is the largest deficit in the 12-year history of the Milliman Pension Funding Study. Pension expense, the charge to company earnings, also registered a record level of $38.3 billion during fiscal year 2011, a $7.8 billion increase over fiscal year 2010, which had been the previous high.

Somewhat of a surprise were the aggregate 2011 cash contributions of the Milliman 100 companies. While the $55.1 billion in contributions was significantly greater than most prior years, the contribution total was lower than expected and $5.2 billion below the record level of $60.3 billion set during 2010. According to footnote disclosures and press releases to investors, many companies have chosen to defer their pension contributions to 2012. At least 10 companies have already disclosed to investors that their expected contributions during 2012 will be $1 billion or more. With these disclosures and the impact of low discount rates, contributions are likely to reach a new record level in 2012.

This study covers 100 U.S. public companies with the largest defined benefit pension assets whose 2011 annual reports were released by March 5, 2012.