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Verizon Communications Inc. made a $1 billion voluntary contribution to its pension plan in the first quarter of 2018, wiping away any required pension contributions until 2026.
The $1 billion discretionary contribution was made to strengthen Verizon’s balance sheet in light of the tax overhaul, Bob Varettoni, a spokesman for Verizon, told Bloomberg Law in an email. The pension contribution was disclosed in Verizon’s first-quarter earnings statement April 24.
Verizon is the latest company to announce pension plan funding increases in the wake of the new tax law. FedEx Corp., 3M Co., AbbVie Inc., and General Dynamics Corp. all announced large voluntary contributions to their pension plans after the tax overhaul was signed. Companies that make voluntary contributions to their pension plans before September can still claim it as a deduction for 2017 under the higher 35 percent tax rate, meaning they can save more money than if they waited and could only claim a deduction at the new 21 percent rate.
At the end of 2017, Verizon’s pension plans were 89.1 percent funded with $19.175 billion in plan assets to cover $21.531 billion in pension obligations, according to its 2017 annual report. That funding level is a big jump from 69.5 percent at the end of 2016.
The company made a $3.4 billion contribution to its pension plan in the first quarter of 2017, prompted by increased variable-rate premiums paid to the nation’s pension insurer, the Pension Benefit Guaranty Corporation. Such premiums are paid by underfunded plans.
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