Summary
AT&T Inc. (T) announced a significant pension de-risking transaction through an 8-K filing on May 3, 2023. The company, along with the independent fiduciary of its Pension Benefit Plan, entered into an agreement with Athene Holding Ltd. subsidiaries to transfer certain defined benefit pension obligations for approximately 96,000 retirees and participants. This transaction, which closed on May 3, 2023, involves the purchase of nonparticipating single premium group annuity contracts. Under this agreement, Athene will assume the sole responsibility for paying the pension benefits to the affected participants, beginning with their August 2023 payments. Importantly, this does not alter the amount of pension benefits participants will receive. AT&T funded the purchase using assets directly from the pension trust, requiring no additional cash contributions from the company. This move is expected to result in a one-time, non-cash pre-tax pension settlement gain of approximately $350 million for AT&T in the second quarter of 2023, though the final impact is subject to actuarial adjustments.
Key Highlights
- 1AT&T transferred certain defined benefit pension obligations to Athene Holding Ltd. subsidiaries.
- 2The transaction covers approximately 96,000 AT&T participants and beneficiaries.
- 3Athene will be solely responsible for paying the pension benefits to Transferred Participants, starting August 2023.
- 4The pension benefits payable to Transferred Participants remain unchanged.
- 5The transaction was funded by the AT&T Pension Benefit Plan's assets, not by direct AT&T cash contributions.
- 6AT&T expects to recognize a one-time, non-cash pre-tax pension settlement gain of approximately $350 million in Q2 2023.
- 7The funded status of the pension plan remained unchanged by this transaction.