Increase (Decrease) in Obligation, Other Postretirement Benefits

AT&T INC.SEPTEMBER 30, 2022  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ContinuedDollars in millions except per share amounts  
During the third quarter of 2022, we committed to, and reflected in our results, plan changes impacting postretirement health and welfare benefits. This plan change reduced our postretirement benefit obligation approximately $2,400 and aligns our benefit plans to market level. In conjunction with this plan change, we also remeasured the postretirement plan assets and liabilities as of July 1, 2022, and recognized an actuarial gain of $1,084.  
As part of our 2022 remeasurements, we updated the weighted-average discount rates used to measure our pension and postretirement benefit obligations as summarized in the table below.   


|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Pension Benefits |  | Postretirement Benefits |
|  | Dec. 31, 2021 | Mar. 31, 2022 | Jun. 30, 2022 | Sep. 30, 2022 |  | Dec. 31, 2021 | Jul. 1,2022 |
| Weighted-average discount rate for determining benefit obligation | 3.00  | % | 3.70  | % | 4.80  | % | 5.50  | % |  | 2.80  | % | 4.70  | % |
| Discount rate in effect for determining service cost, for period beginning | 3.20  | % | 3.80  | % | 4.90  | % | 5.50  | % |  | 3.10  | % | 4.90  | % |
| Discount rate in effect for determining interest cost, for period beginning | 2.30  | % | 3.40  | % | 4.40  | % | 5.30  | % |  | 2.10  | % | 4.20  | % |
| Expected long-term rate of return on plan assets (annual rate) | 6.75  | % |  |  |  |  | 4.50  | % |  |
| Actual return on plan assets (YTD rate) |  | (5.20  | %) | (11.30  | %) | (15.40  | %) |  |  | (12.20  | %) |

  
  
The following table details qualified pension and postretirement benefit costs included in the accompanying consolidated statements of income. The service cost component of net periodic pension (credit) cost is recorded in operating expenses in the consolidated statements of income while the remaining components are recorded in “Other income (expense) – net.”

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | Three months ended | Nine months ended |
|   | September 30, | September 30, |
|   | 2022 |  | 2021 | 2022 |  | 2021 |
| Pension cost: |   |  |   |  |  |  |
| Service cost – benefits earned during the period | $ | 141  |  |  | $ | 241  |  | $ | 488  |  |  | $ | 723  |  |
| Interest cost on projected benefit obligation | 481  |  |  | 321  |  | 1,216  |  |  | 951  |  |
| Expected return on assets | (740) |  |  | (890) |  | (2,410) |  |  | (2,617) |  |
| Amortization of prior service credit | (33) |  |  | (36) |  | (100) |  |  | (108) |  |
| Net pension (credit) cost before remeasurement | (151) |  |  | (364) |  | (806) |  |  | (1,051) |  |
| Actuarial (gain) loss | (216) |  |  | (374) |  | (2,573) |  |  | (3,021) |  |
| Net pension (credit) cost | $ | (367) |  |  | $ | (738) |  | $ | (3,379) |  |  | $ | (4,072) |  |
|  |  |  |  |  |  |  |
| Postretirement cost: |  |  |  |  |  |  |
| Service cost – benefits earned during the period | $ | 7  |  |  | $ | 11  |  | $ | 25  |  |  | $ | 34  |  |
| Interest cost on accumulated postretirement benefitobligation | 75  |  |  | 53  |  | 201  |  |  | 158  |  |
| Expected return on assets | (23) |  |  | (38) |  | (88) |  |  | (114) |  |
| Amortization of prior service credit | (697) |  |  | (634) |  | (1,861) |  |  | (1,903) |  |
| Net postretirement (credit) cost before remeasurement | (638) |  |  | (608) |  | (1,723) |  |  | (1,825) |  |
| Actuarial (gain) loss | (1,084) |  |  | —  |  | (1,084) |  |  | —  |  |
| Net postretirement (credit) cost | $ | (1,722) |  |  | $ | (608) |  | $ | (2,807) |  |  | $ | (1,825) |  |
|  |  |  |  |  |  |  |
| Combined net pension and postretirement (credit) cost | $ | (2,089) |  |  | $ | (1,346) |  | $ | (6,186) |  |  | $ | (5,897) |  |

  
22
