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Analysis: U.S. companies take aim at pension risk with lump-sum offers
http://finance.yahoo.com/news/analysis-u-companies-aim-pension-120126428.html?l=1By Jilian Mincer
NEW YORK (Reuters) - Corporate America is finally ready to deal with a monkey on its back: massive pension obligations.
AT&T Inc on Friday said it plans to contribute a $9.5 billion stake in its wireless business to its underfunded pension plan. Earlier this week, Verizon Communications Inc moved to unload $7.5 billion in pension obligations to insurer Prudential Financial Inc.
But by far the most common trend in corporate America is to offer lump-sum payouts to thousands of retirees now - these voluntary buyouts could cost companies millions of dollars upfront, but they eliminate the risk of obligations soaring out of control in the future.
<snip>
Historically, the vast majority of people, when offered a lump sum payout, have taken it instead of waiting for a pension check. That rate has fallen slightly since the recession as workers have grown reluctant about managing their own funds.
NEW YORK (Reuters) - Corporate America is finally ready to deal with a monkey on its back: massive pension obligations.
AT&T Inc on Friday said it plans to contribute a $9.5 billion stake in its wireless business to its underfunded pension plan. Earlier this week, Verizon Communications Inc moved to unload $7.5 billion in pension obligations to insurer Prudential Financial Inc.
But by far the most common trend in corporate America is to offer lump-sum payouts to thousands of retirees now - these voluntary buyouts could cost companies millions of dollars upfront, but they eliminate the risk of obligations soaring out of control in the future.
<snip>
Historically, the vast majority of people, when offered a lump sum payout, have taken it instead of waiting for a pension check. That rate has fallen slightly since the recession as workers have grown reluctant about managing their own funds.