Looking ahead to $90+ billion in contributions

We’ve seen quite a bit of news lately about record pension contributions—we spoke with CNBC and BusinessWeek just in the last week. These record contributions are big news now, but it’s not really “new” for those of us who have been monitoring pension underfunding and low interest rates; we’ve been predicting record contributions for more than a year. Which raises the question: What do we expect in terms of pension contributions another year or two out?

Our 2011 Pension Funding Study noted that record contributions in the amount of $65 billion were made for the Milliman 100 companies for the fiscal year ending in 2010.  Given the effect that this low interest rate environment continues to have on pension liabilities, we expect plan funding levels to reach new highs during the next couple of years.

In order to better reflect the anticipated increase in plan sponsor contributions for years 2012 and 2013, our Pension Funding Index will now assume a 40% increase above the 2010 known level for purposes of our funding projections for these years, for an estimate of $91 billion assumed in both 2012 and 2013.  The actual contributions for the fiscal year ending in 2011 will be compiled in our 2012 Pension Funding Study, which is due for release by the end of March.

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