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July 11, 2022

Will AT&T Cut Retiree Healthcare & Employee Benefits?

As a recruiter I’m often asked about benefit packages offered by certain companies.  Over the last year there have been substantive changes in benefits coming from Fortune 500 companies with most of the changes going the wrong way. We’ve seen many large corporations choose to cut employee benefits whether that be pension, 401(k), or healthcare. Verizon created headlines all the way back in 2005 when they announced they would freeze their pension program. In the years to come many corporations followed suite by moving to defined contribution plans as opposed to defined benefit plans. This trend culminated in General Electric deciding to freeze the largest pension fund in the United States. Other corporations have decided to target 401(k) plans.  ExxonMobil announced earlier this year that they would suspend their 401(k) matching program indefinitely. Which brings us to AT&T...

Related Article: AT&T Layoff Crystal Ball

Last year, a surprise announcement was made where AT&T stated in a Memo that they will be reducing benefits in 2021 and 2022.  So while some of these changes are still under way, the question must be raised: Will AT&T further cut Retiree Healthcare & Employee Benefits?

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AT&T CEO John Stankey has expressed a goal of $10 billion in cost cuts and the company has made it clear that worker’s benefits are next on the chopping block. 

So who will be affected by these cuts? Employees retiring after 2022 will be hit the hardest, as they will lose all medical coverage typically given to retirees. AT&T will no longer supplement monthly premiums for medical or dental.  This may not affect all employees. You should call the benefit office to inquire about your particular situation.

This announcement came on the heels of AT&T alerting employees that they will no longer offer a Healthcare reimbursement account for those who retired after January 1st 2021. Currently things like out of pocket costs, supplemental coverage, and incremental coverage are covered by a healthcare reimbursement account from AT&T. According to AT&T’s Summary Plan description the HRA credit is worth $2,700 for an employee and $1,500 for an eligible dependent. If an employee takes full advantage of this benefit this would be worth $4,200 per year. Over a 20 year period this could save an employee and their family about $84,000.  

AT&T pension benefits are being reduced as well. AT&T uses a Career Average Minimum (CAM) or a Pension Band Minimum (PBM) formula to calculate your pension contributions. Your CAM benefit is determined by multiplying your career pension compensation by a percentage and then dividing by 12. Currently that percentage is 1.6%. After January 1st 2022 that percentage will drop to 1%. 

Management employees may receive a benefit based on the PBM formula. The PBM benefit is determined by multiplying a percentage by your pension compensation. Currently that percentage is 1.2%. After January 1st 2022 that percentage will be reduced to 0.75%.

AT&T will also reduce its life insurance benefit. After January 1st 2021, the life insurance benefit will now be distributed as a flat $15,000 payment as opposed to a percentage of income. The company will also offer the option to purchase supplemental life insurance during annual enrollment.

AT&T is not the only company to cut benefits during the pandemic. History shows time and time again that when a recession hits corporations will decrease or suspend benefits. We witnessed this in the 2001 recession when General Motors, Charles Schwab, Goodyear Tire & Rubber, & Ford all decreased or suspended their company match programs. The same happened in 2008, with Forbes reporting that nearly 20% of companies with over 1,000 employees reduced or suspended 401(k) contributions.  Unfortunately, that trend seems to be continuing in the wake of the current recession brought on by the Coronavirus pandemic. According to CNBC, 8% of employers have reduced or suspended 401(k) contributions in this year alone. Major companies like Amtrak, Marriott Vacations Worldwide, and ExxonMobil have all suspended their 401(k) matching programs. In ExxonMobil’s case employees lost a company match of up to 7%, severely hindering an employee's ability to save for retirement. AT&T’s cuts will also make it significantly more challenging for retirees to make their money last as long as they need. 

Questions you need to ask yourself now on the risks of leaving and potential risks of staying at AT&T

  • Should I consider retiring now to lock in my company subsidy and look for another job outside of AT&T?
  • Are their jobs in my specialty available if I do leave?
  • Will my pension grow if I do stay?
  • Will my lump sum pension decrease If interest rates go up next year?
  • Would it be better to leave now with the healthcare subsidy and work a 20-hour per week job or would I do better if I stay and hope I do not get laid off? 
  • Should I look for a contracting job in winter or wait until next year? 

It is my hope that by being aware of these cuts and questions  you can ask yourself  can plan accordingly and make sound financial decisions going forward.  To get a more detailed analysis of how you'll be affected by these benefit cuts, The Retirement Group has webinars once per week on this topic which you can sign up for here.


Santone, Angela. “AT&T: Updates to Your Retirement Benefits.” AT&T Memo, AT&T Inc., 15 Dec. 2020

“The Retirement/Transition Guide for AT&T Employees.” The Retirement Group, The Retirement Group, 11 Aug. 2020, https://telecom.theretirementgroup.com/att-guide-download-google

AT&T Nonbargained Summary Plan Description, 2020

Lacurci, Greg. "Covid Pandemic Led Thousands of Businesses to Slash 401(k) Contributions." CNBC, 17 Dec. 2020, https://www.cnbc.com/2020/12/17/covid-pandemic-led-thousands-of-businesses-to-slash-401k-contributions.html

Tretina, Kat. “What To Do If Your Employer Suspends 401(k) Matching Contributions.” Forbes, Forbes, 10 Apr. 2020, https://www.forbes.com/sites/advisor/2020/04/10/covid-19-employers-suspending-401k-matching-contributions/#7a48068b285f.