The so-called discount rate - the proxy that pension plans use as the expected income they will make annually from a corporate bond - is at 4.06 percent, compared with nearly 5 percent two years ago and 6.2 percent at the end of 2008. Pension funds have in the past had to use that discount rate to calculate the net present value of their obligations.
"You've just seen a ballooning effect of liabilities" as the discount rate continues to fall to new lows, said Zorast Wadia, a principal at actuarial firm Milliman.
At the same time, weakness in the U.S. stock market wiped out $83 billion in plan assets in the first two months of this year, widening the overall pension funding deficit to $487 billion, according to Mercer.
"In just two months we have seen the entire improvement in funded status from last year disappear," said Jim Ritchie, a principal in Mercer's retirement business. A recovery in stocks this month will have helped to mitigate the problem.
Of the pension plans operated by S&P 1500 companies, 59 percent are below 80 percent funded, Mercer estimates. In 2007, before the financial crisis, the average corporate pension was 104.3 percent funded, while in 2000 the average pension plan was 121.9 percent funded, according to Mercer data. A few companies such as General Electric Co <GE.N> and General Motors Co <GM.N> have announced plans to increase their pension contributions this year, rather than pay higher premiums to the Pension Benefit Guaranty Corp, a federal government agency that insures private defined-benefit pension plans.
As of the start of this year, companies that operate their own plans pay a variable-rate premium of $30 per $1,000 of underfunded benefits, up from a rate of $24 in 2015. GE, for instance, expects to contribute $930 million into its plan this fiscal year, while GM expects to contribute $2 billion into its plan. Zion estimates that 48 companies in the S&P 500 - a group including aluminum maker Alcoa Inc <AA.N>, Boeing <BA.N>, and electric utility PG&E Corp <PCG.N> - could see their cost of servicing pensions drop 5 percent and interest costs drop 20 percent under the new SEC rules, resulting in a more than 5 percent increase in their pre-tax income.