The funding ratio at the typical U.S. corporate pension plan declined more than 11 percentage points last month after falling more than 13 percentage points in November, according to data released by BNY Mellon Asset Management.

The two double-digit declines resulted primarily from falling rates of longer-term high-grade corporate bonds, the Bank of New York Mellon Corp. unit said.

Liabilities rose 20.3% last month as corporate bond yields dropped by 125 basis points, the unit said, and a yearend stock rally boosted asset returns by 3.2%.

Market sentiment is pointing toward an increase in Treasury yields this year, according to BNY Mellon Asset Management.

"The Fed's drive to bring down interest rates to help the economy has had the collateral effect of increasing the liabilities of typical U.S. corporate pension plans," Peter Austin, the executive director at BNY Mellon Pension Services, said in a press release the company issued last week.

Bank of New York Mellon had $22.4 trillion of assets under custody and administration, $1.1 trillion of assets under management and services, and $12 trillion of outstanding debt as of Sept. 30.

Mercer Consulting, a unit of New York's Marsh & McLennan Cos., said last week that pension expenses will grow to about $70 billion last year from about $10 billion in 2008.

Mercer projects that the $60 billion increase could cut 8% from this year's profits. The company said difficult market conditions last year erased a surplus in pension plan funding, saddling large companies with a deficit of $409 billion as well as higher expenses.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.