The funded status of the 100 largest corporate defined benefit pension plans decreased by $59.7 billion in December 2011, as measured by the Milliman 100 Pension Funding Index (PFI). The decrease was primarily due to higher liabilities based on a decrease in corporate bond interest rates that are the benchmarks used to value pension liabilities. The funded status decline was partially offset by positive investment performance during December. As of December 31, the funded ratio dropped to 72.4% from 75.0% at the end of November.
In 2011, historically low interest rates were the dominant factor that drove a $236.4 billion deficit increase, which more than doubled the $228.0 billion deficit already in place at the end of 2010. The resulting 2011 year-end funded status deficit is a massive $464.4 billion—the largest deficit in the 11-year history of the Milliman 100 PFI.
The loss in funded status during 2011 is expected to produce an estimated increase of $30.0 billion in pension expense for 2012.