Last Friday, AT&T announced that it would direct a $9.5 billion stake of its wireless business to its pension plan in order to provide benefits for 360,000 retired employees. An AT&T spokeswoman also admitted to Reuters that the pension plan had been underfunded by $0.2 billion at the end of 2011.
The move mirrors similar efforts by General Motors and rival Verizon. Earlier in the week, Verizon transferred $7.5 billion in pension obligations to its insurer Prudential. That single upfront payment removed a quarter of Verizon’s long-term employee retirement burden.
The move was applauded by the Communications Workers of America (CWA), the largest union that represents AT&T laborers:
“AT&T’s announcement comes at a time when many companies have moved in the opposite direction, eliminating or underfunding their pension plans and putting workers’ retirement security at risk,” the CWA said.
A spokeswoman for AT&T said that the move will not significantly affect its Q3 earnings.
“We’re making this contribution, which is many times above our estimated required funding for 2013, at a time when many companies have eliminated their pensions,” the spokeswoman said.
Most telecommunication companies and their respective unions have been at odds in recent years over pension neglect. These moves by both Verizon and AT&T, no matter their intention, appear to be a positive a step in terms of labor-management relations.