The Pension Benefit Guaranty Corp.'s deficit hit a record $34 billion in fiscal 2012, the agency said last week.

The deficit in the PBGC's insurance program for single-employer plans climbed to $29.1 billion in fiscal 2012, up from $23.3 billion the previous year. The deficit in the agency's insurance program that covers multiemployer pension plans climbed to about $5.2 billion, up from $2.8 billion the previous year.

The PBGC attributed the rise in its deficit to lower interest rates used to value plan liabilities and anticipated increases in financial assistance to multiemployer plans.

The “PBGC continues its work to preserve pensions and to provide some of the best service anywhere, but continuing financial deficits will ultimately threaten its ability to pay benefits,” PBGC Director Joshua Gotbaum said in a statement.

As was the case in the prior fiscal year, the PBGC did not incur any multibillion-dollar losses in fiscal 2012. The single biggest loss the PBGC incurred was its takeover in January of a pension plan sponsored by Friendly Ice Cream Corp. of Wilbraham, Mass., which filed for Chapter 11 bankruptcy last year but has since exited. The plan had $115 million in unfunded benefits of which the PBGC has guaranteed $114 million.

But for several months this year, the PBGC faced the possibility of being hit with its biggest-ever loss. In January, American Airlines Inc., whose parent company, AMR Corp. of Fort Worth, Texas, filed for bankruptcy a year ago, said it intended to terminate its four pension plans, shifting to the PBGC the liability to pay about $8.7 billion in promised but unfunded benefits.

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If the plans had been terminated, that $8.7 billion loss would have eclipsed the PBGC's previous biggest loss: $7.4 billion from its 2005 takeover of five United Airlines' pension plans.

But in March, American, which faced strong pressure from the PBGC to keep the plans, reversed course and agreed to freeze the plans, which it did on Nov. 1.

During fiscal 2012, the PBGC took over 155 plans from financially ailing or failed employers, up from 152 the prior year. In fiscal 2012, the agency paid about $5.5 billion to participants in failed single-employer plans, about the same as in 2011.

The PBGC said its potential exposure to future pension losses from financially weak companies increased to about $295 billion, up from $227 billion in fiscal 2011.

The PBGC faces other challenges as well, as employers try to reduce the size of their pension plans by offering certain participants the option to convert their monthly annuity to a cash lump-sum payment and/or transferring, as Verizon Communications Inc. and General Motors Co. have announced, benefit obligations to an insurer through purchasing a giant group annuity.

Either approach means less premium income for the PBGC, which uses that revenue to help pay benefits to participants in failed plans the agency has taken over. The base premium, currently at $35 per plan participant, will increase to $42 in 2013 and $49 in 2014. In addition, the premium surcharge, paid by employers with underfunded plans, will increase to $13 per $1,000 of plan underfunding in 2014. The current surcharge is $9 per $1,000 of underfunding.

Those premium increases were mandated under legislation Congress passed this year.