Dept. of Labour grants AT&T tentative pension plan approval

Monday 9 September 2013 | 15:00 CET | News
The US Department of Labour has granted AT&T tentative approval to contribute up to USD 9.5 billion of preferred equity to its pension plan, bringing the company closer to fully funded status, reported The Wall Street Journal. The Labour Department posted a "notice of proposed exemption" on 6 September saying AT&T would be allowed to exceed federal limits that prohibit the company from putting more than 10 percent of its own stock into its pension plan. The proposal is currently open for public comment and would be retroactively effective as of 1 September if formally approved. In 2012, AT&T's pension was underfunded by approximately USD 13.9 billion. It filed for the exemption in October 2012 and is hoping to get the go-ahead by year-end 2013. Under the plan, the company will transfer a newly created class of preferred stock equity in AT&T Mobility to the trust used to pay pension benefits. The preferred equity strategy will allow AT&T to keep its cash for other purposes and lower its tax bill, while giving the pension plan future annual distributions of USD 560 million. Under its proposal, AT&T will contribute 320 million preferred shares valued at USD 8 billion, but with dividends the company says they are worth a total of up to USD 9.5 billion.

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