Trouble is brewing with many U.S. pension plans.
Corporate pension plans are falling behind on payouts to retirees in the midst of a slowing economy and the lowest bond yields on record.
The gap between the assets of the 100 largest company pensions and their projected liabilities ballooned to a deficit of $459.8 billion, an increase of $108 billion in August from the previous month, actuarial and consulting firm Millman Inc. said Tuesday in a statement.
Corporate pension plans are suffering as the Federal Reserve attempts to keep interest rates low to prevent another recession.
Last month, AA rated company bond yields, a benchmark in determining future liabilities, reached the lowest levels ever. At the same time, obligations increased by $91 billion to $1.54 trillion, according to Milliman.
AA corporate bond yields fell to 2.81 percent last month from 3.9 percent at the end of 2009, according to Bank of America Merrill Lynch index data. That compares with the average of 5.8 percent in 2008.
There is concern that companies may have to divert more money to their pension plans or make riskier investments, such as leveraged loans, real estate and private-equity, Fitch Ratings said in an earlier report from August.
Earlier data from a Millman report in April indicated that contributions to the 100 biggest corporate pension plans increased to $54.5 billion in 2009 from $29.5 billion the previous year and compares with an average of $38.7 billion for the prior five years.
Corporate pension plans have deteriorated since the fall of 2008 as the financial crisis caused investments to plunge.
