Changes to the AT&T Pension Plan Over the Years

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As long as I’ve worked in the recruiting business, I’ve never received as many inquiries about pension plans as I have in the past month. So for my clients who are AT&T employees I decided to look at AT&T’s pension plan and some of the changes it has undergone over the years.

Lump sum amounts from the AT&T Pension Plan are calculated based on prevailing interest rates at the time an employee leaves the company. Generally, the lower the interest rate, the higher the lump sum amount and vice versa. Before 2012, the AT&T Pension Plan was using the 30-year Treasury rate, also known as the GATT rate, for lump sum distribution calculations. After January 1, 2012, the Pension Plan began using the provisions of the Pension Protection Act of 2006 (see below for more information), which began phasing in the use of the “CBR”, or, Corporate Bond Rate. Historically, the Corporate Bond Rate has run between 1.2% and 2.0% higher than the GATT rate.

For AT&T salaried managers, the lump sum interest rate is re-calculated each calendar quarter, using the average daily interest rates for the middle month of the previous quarter. So for example, the interest rate used for pension plan lump sum distribution calculations in the 2nd Quarter (effective separation dates of April 1 through June 30) is the average of the daily interest rates published for the month of February.

For AT&T hourly non-managers, the lump sum interest rate is re-calculated each calendar year, using the average daily interest rates from November of the previous year.

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Pension Protection Act

After the Pension Protection Act of 2006 was instituted, the AT&T Pension Plan implemented the use of the corporate bond interest rate for both non-bargained (salaried managers) and bargained-for (hourly workers) employees. In order to calculate lump sum distributions for pension plan participants, use of the corporate bond interest rate took effect on January 1, 2012, and was phased in over a three-year period, starting with a 75% GATT rate / 25% Corporate Bond rate blend in 2012 and ending with a 100% Corporate Bond rate in 2015.**

History of AT&T Pension Plan Interest Rate:

The table below shows the AT&T Pension Plan interest rates for each quarter from 2002-2017. As you can see, interest rates declined significantly over this time period. As a reminder, the lower the interest rate, the higher the lump sum distribution value and vice versa.


*The interest rate for bargained employees in Q1 2012 was actually 3.02%, as the plan still used 100% of the GATT rate during the quarter per the previous collective bargaining agreement. The interest rate increased to 3.44% on April 1, 2012 for bargained employees which was the rate through the remainder of the calendar year.

** The legal information provided here is merely a summary of our understanding and interpretation of some of the current regulations and is not exhaustive.