AT&T to Take $7.9 Billion Pension Hit; $2.1 Billion Copper Retirement

AT&T will take a $7.9 billion charge for pension-related costs at least partially because people are living longer. The company said the losses were in part due to “updated mortality assumptions” in addition to a decrease in the rate it uses to measure its pension obligations. The nonprofit Society of Actuaries recently updated its mortality tables for the first time since 2000 to reflect the longer lifespans, estimating today’s retirees will live about two years longer than in 2000. That means companies will have to sock away more money to pay benefits for those added years. AT&T, along with about 30 other companies, in the past few years has switched to mark-to-market pension accounting to make it easier for investors to gauge plan performance. In 2014, AT&T posted a $7.6 billion pretax gain tied to pension accounting.

AT&T also said it would take a $2.1 billion noncash charge in the fourth quarter after it determined that certain copper assets won’t be necessary to support future network activity, because of lower demand for legacy voice and data services and the move toward new technology. It said those copper assets will be abandoned in place.