Along with other businesses, AT&T is currently attempting to reduce expenses in order to assist in addressing the economic slowdown caused by the coronavirus. The epidemic had a negative impact on the whole economy, but AT&T was particularly heavily hit. In an effort to save labor expenses, AT&T has decided to implement layoffs. Chevron intends to "cut 10% to 15% of its worldwide workforce," according to Reuters. Some corporations, such as ExxonMobil, have opted to reduce perks. The announcement was made by ExxonMobil that it would no longer match employee contributions to their retirement savings accounts. It has also been revealed that they have been using a "Performance Improvement Plan" to fire employees.

But will traditional cost-cutting measures be enough? Could a pension freeze be the next step for AT&T? 

In the past, companies have found success in preserving cash by freezing their pension programs. In , Verizon put a freeze on their pension. As an alternative, they provided workers with an improvement over the 401(k) programs that had been in place since . At the time, ABC reported that Verizon planned to convert from a defined benefit (DB) pension plan to an upgraded 401(k) plan in order to save $3 billion over the course of ten years. 

A growing tendency in the economy is for firms to try and shift from Defined-Benefit (DB) plans to Defined Contribution (DC) plans. Since the early 1980s, the overall number of company pension programs has been decreasing.The number of company pension plans with 100 or more participants has decreased from about 26,000 in 1983, the high, to roughly 8,400 in , according to AARP.That represents a two-thirds decrease in around 35 years. Furthermore, according to a survey by Barron's, defined contribution (DC) plans hold approximately 60% of the $28 trillion in retirement assets in the United States. That percentage was less than 50% in the year , when a lot more firms were offering DB plans. The days of a person working thirty years at the same company and receiving a sizable pension are dwindling. In an effort to better control the amount of their present pension commitments, many companies are offloading or freezing their defined benefit pension plans. By enrolling employees in a DC plan, "the corporate pension plan stops accruing new benefits as workers age and salaries rise," according to Barron's.

Barron's mentions a number of businesses, including General Electric and Lockheed Martin, who have chosen to freeze their defined-benefit pension plans as of late. General Electric has offered 100,000 former employees a buyout option for current retirees and frozen the pensions of 20,700 employees. Another cost-cutting strategy used by organizations is the buyout option. The Retirement Group claims that defined benefit (DB) plans that give retirees a lifetime monthly benefit frequently result in significant pension liabilities for the employer. But "corporations could take the defined-benefit off their books by offering a lump sum to both workers and retirees." This has the potential to transfer risk from the company to its employees for businesses like AT&T.

In general, this trend benefits investors because it lowers the risk of investing in companies who are able to reduce their debt. For employees, who frequently depend on those benefits for their retirement years, losing DB plans is a terrible thing. A pension freeze usually has the greatest negative impact on workers who are in the mid-to-late stages of their careers. Asking your HR department for an estimate of your pension benefits following retirement is a smart idea if your pension is frozen. Asking for estimates for both your lump-sum and monthly payout is advised by AARP. It's a good idea to find out how much your spouse would get in the event of your death.

The pension decision in front of you becomes clearer when you understand the full scope of what AT&T offers. According to publicly available information, AT&T maintains an active defined benefit pension plan, which provides retirement income based on factors such as years of service and compensation history. AT&T also offers retiree healthcare benefits to eligible employees, which can provide meaningful coverage for those who retire before reaching Medicare eligibility at age 65. Integrating all of your AT&T benefits into one cohesive retirement plan ensures nothing is overlooked and gives you confidence in the path ahead.