* * Important Pension Information * *

To end the 75% funding claim repeated from the news articles- No participant in any PBGC covered Pension Plan can get a Cash Balance payout if the plan funding level is below 80% per the Pension Protection Act of 2006. AT&T continues to payout millions to retiring employees that request the cash balance method of payment.
From The IRS Filing that AT&T is required to make yearly for the Pension Plan. I would imagine the wireless tracking stock is included here. I hope just because it says 75% in a news article someone might fact check it before you post it as fact. The Intern that wrote the article might not have passed math class..................
Funding Target Attainment Percentage
2017 96.5%
2016 98.5%
2015 98.7%
You might review this article:

https://files.consumerfinance.gov/f/201601cfpbpension-lump-sum-payouts-and-your-retirement-security.pdf

There are PRO’s and CON’s on deciding on a Lump Sum vs. Monthly Annuity. Everyone’s situation is different with intangibles involved in the decision process. Choose wisely and visit with a Financial Advisor or start educating yourself on Retirement Planning.

Ask yourself what are your plans to generate a steady source of Retirement Income, outside of Social Security. Pensions were designed to help in that regard.

Lump Sum payments benefit the company on releasing them from future obligations, shifting the responsibility to you.

Also, every year the company must file a report to the US Department of Labor outlining the Pension plan financial specifics and health of the plans. There are multiple Pension Plans AT&T provides depending on the affiliate you are employed under. It is a very interesting report to read. All plans roll up under the Umbrella Corporate AT&T Pension Benefit Plan.

You can find the report at this location.

https://www.efast.dol.gov/portal/app/disseminatePublic?execution=e1s1

You only need to enter DATA on these two fields and then perform a search

Enter PLAN (PN) number as: 006

Enter EIN as: 431301883

A listing of filings will come up and you would review the last plan submitted for the Plan Year ending December, 31 2018.

Also, the company produces a condensed annual report summary for the past 3 years (ANNUAL FUNDING NOTICE for the AT&T PENSION BENEFIT PLAN). This report should be available on the Company Web site (or via Fidelity) under Pension Plan Documents applicable to the plan you fall under and should be showing a summary for Plan years 2016, 2017, and 2018.

Also, these sites may also be of interest on the Pension Benefit Guaranty Corporation (PBGC).

https://www.pbgc.gov/

https://www.pbgc.gov/news/testimony

Corporations pay a Premium PBGC to fund this Agency Responsible for Insuring Corporate pension plans. The AT&T Pension plans are categorized as SINGLE EMPLOYER Plans.

There is always the option that the Company may terminate the plan.

There are two ways they can terminate the pension plan.

First, they can end a plan in a “standard termination,” but only after showing the PBGC that the plan has enough money to pay all benefits owed to participants. Under a standard termination, a plan must either purchase an annuity from an insurance company (which will provide you with periodic retirement benefits, such as monthly for life or for a set period of time when you retire) or, if the plan allows, issue one lump-sum payment that covers your entire benefit. The plan administrator must give advance notice that identifies the insurance company (or companies) selected to provide the annuity. The PBGC’s guarantee ends upon the purchase of an annuity or payment of the lump-sum. If the plan purchases an annuity for you from an insurance company and that company becomes unable to pay, the applicable State Guaranty Association guarantees the annuity to the extent authorized by that state’s law.

Below are links for issues on the State Guaranty Associations

(each State has their own guidelines, Coverages, Benefit Limits, etc)

https://www.nolhga.com/

https://www.nolhga.com/factsandfigures/main.cfm/location/stateinfo

Second, if the plan is not fully-funded, AT&T may apply for a distress termination. To do so, however, they must be in financial distress and prove to a bankruptcy court, or to the PBGC, that they cannot remain in business unless the plan is terminated. If the application is granted, the PBGC will take over the plan as trustee and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds.

Hope this may have helped.

Comment! It's anonymous!

11 replies (most recent on top)

@1ams said, "If you do the math, you receive significantly more dollars if you take the monthly annuity versus the lump-sum, or the partial lump-sum and annuity, assuming you are in good health and think you'll live a long time after you retire."

Yes, of course you'll receive more dollars with the annuity. But a dollar now is worth more than a dollar a year from now, than a dollar five years from now and a dollar 20 years from now. The future dollars are worth less than present dollars.

Actuaries work it out so that either way, it amounts to the same amount in PRESENT dollars.

I made a mistake when I wrote this: "the government makes the point that you are still better off taking the lump-sum in most cases, because of the federal government's pension guaranty."

The correct statement is that the government makes the point that you are still better off taking the monthly annuity in most cases, because of the federal government's pension guaranty.

Sorry for any confusion that this may have caused.

If you do the math, you receive significantly more dollars if you take the monthly annuity versus the lump-sum, or the partial lump-sum and annuity, assuming you are in good health and think you'll live a long time after you retire.

With increased life spans, many can expect to live 30+ years after they retire.

Financial advisors tell you to take the lump-sum because they want to invest it for you and earn commissions.

AT&T encourages lump-sums to get the pension liability off their books.

The U.S. government publishes information on pension annuities versus lump-sums and it notes that most people would be better off financially if they take the monthly annuity; in their research studies, they noted that a frequently cited reason that people give for taking the lump-sum is fear that the employer will go bankrupt; the government makes the point that you are still better off taking the lump-sum in most cases, because of the federal government's pension guaranty.

T isn't going under anytime soon.

As noted by others, it's a personal decision whether to take the monthly annuity versus the lump-sum, but if you take the lump sum, do it with your eyes open, knowing that you are taking a big discount.

Still haven’t received any numbers for a buyout. Not near retirement but would take a lump sum if the amount was to my liking. I to received notification in March about a buyout starting July 31st. Left on my own but would love to just get att out of life.

Another article of interest

https://www.fool.com/retirement/2018/06/18/lump-sum-or-annuity-how-to-make-the-right-pension.aspx

At the end of article, summarizes it best:

The right pick for you
There's no one-size-fits-all answer for whether a lump sum or a monthly payment will work better for you. But in general, the more you have in other retirement savings, such as IRAs, the less need you have for the flexibility a lump sum can provide, and the more useful an added monthly pension can be. If you have no other savings beyond Social Security and your pension, on the other hand, having a lump sum offers a lot more flexibility in the event of unexpected big expenses.

A lot depends on your temperament. Some retirees love the idea of managing their own investments and ensuring that they leave a legacy for their loved ones, and if you're one of them, a lump sum can give you a much better opportunity to build up savings that will give your family a leg up financially. Other retirees find investing a burden, preferring to leave it to their former employer. Monthly pension income is a lot easier to budget for, even if it doesn't give you the same options in every circumstance.

You owe it to yourself and your family to make sure your pension works as hard as it can for you. You must consider carefully which pension options to choose, because once you've made your choice, it's generally impossible to change your mind. By knowing your own preferences about whether you want to be responsible for investing your retirement savings or would rather leave it in the hands of the pension plan, you'll be best able to make a choice you can live with for the rest of your life.

Looks like the OP of this posting plagiarized from an earlier posting.
I would know, as I was the OP of the verbiage below.

You might review this article:

https://files.consumerfinance.gov/f/201601cfpbpension-lump-sum-payouts-and-your-retirement-security.pdf

I agree with FlyUnited. Just give me the cash and I'll invest it with the help of a fiduciary. For that matter, give me all my Social Security (employer + employee) money and I'll be a very wealthy man by the time I retire. The measley 2% SS return s-u-c-k-s.

That'll never happen with the current state of the government.

The filing itself defines the "segment rates":

Segment rates for minimum funding
1st segment rate (years 0 to 4)
2nd segment rate (years 5 to 19)
3rd segment rate (years 20 and after)

Interesting about United Airlines pensions being reduced..... I'll bet the union leaders were not impacted.... they take care of themselves first too, just like company executives. Human greed is everywhere - always will be.

Discount rates are 4.16% for "segment 1", 5.72% for "segment 2" and 6.48% for "segment 3".

Not sure what segments are but probably durations, so 4.16% for short term cash flows (maybe first 10 years), 5.72 for next 10 years, and 6.48% beyond 20 years.

The problem is, the 30 year Treasury rate is only 2.55%. I would think that the discount rates that were used (and probably prescribed by law) are too high.

Here's the current Treasury rate curve:

Date 1 mo 2 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
07/01/19 2.17 2.16 2.21 2.10 1.94 1.78 1.74 1.79 1.90 2.03 2.34 2.55

copied from here:

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

This is good info.
The plan funding level, however, depends on the interest rate assumption that they make.
If they have been optimistic, then the actual funding level is lower than what they are saying.
I don't trust companies with pensions. United Airlines, used bankruptcy as a strategy and effectively stole some of my father's retirement income.

Current management at T might be fine, but who knows about the next crop of scoundrels?

Thread regarding AT&T layoffs

* * Important Pension Information * *

11 replies (most recent on top)

Post a reply