v3.25.4
Pension And Postretirement Benefits
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Pension And Postretirement Benefits
NOTE 14. PENSION AND POSTRETIREMENT BENEFITS

We offer noncontributory pension programs covering the majority of domestic nonmanagement employees in our Communications business. Nonmanagement employees’ pension benefits are generally calculated using one of two formulas: a flat dollar amount applied to years of service according to job classification, or a cash balance plan with negotiated annual pension band credits as well as interest credits. Most employees can elect to receive their pension benefits in either a lump sum payment or an annuity.

Pension programs covering U.S. management employees are closed to new entrants. These programs continue to provide benefits to participants that were generally hired before January 1, 2015, who receive benefits under either cash balance pension programs that include annual or monthly credits based on salary as well as interest credits, or a traditional pension formula (i.e., a stated percentage of employees’ adjusted career income).

We also provide a variety of medical, dental and life insurance benefits to certain retired employees under various plans and accrue actuarially determined postretirement benefit costs as active employees earn these benefits.

In 2023, AT&T and State Street Global Advisors Trust Company, as independent fiduciary of the AT&T Pension Benefit Plan (Plan), entered into a commitment agreement with subsidiaries of Athene Holding Ltd. (Athene) under which AT&T agreed to purchase nonparticipating single premium group annuity contracts that would transfer to Athene $8,067 of the Plan’s defined benefit pension obligations related to certain retirees, participants and beneficiaries under the Plan. This transaction with Athene was considered a settlement for accounting purposes and required us to remeasure our pension plan assets and obligations at quarter-end for the second and third quarters of 2023.

Obligations and Funded Status
For defined benefit pension plans, the benefit obligation is the projected benefit obligation, the actuarial present value, as of our December 31 measurement date, of all benefits attributed by the pension benefit formula to employee service rendered to that date. The amount of benefit to be paid depends on a number of future events incorporated into the pension benefit formula, including estimates of the average life of employees and their beneficiaries and average years of service rendered. It is measured based on assumptions concerning future interest rates and future employee compensation levels as applicable.

For postretirement benefit plans, the benefit obligation is the accumulated postretirement benefit obligation, the actuarial present value as of the measurement date of all future benefits attributed under the terms of the postretirement benefit plans to employee service.

The following table presents the change in the projected benefit obligation for the years ended December 31:
Pension BenefitsPostretirement Benefits
2025202420252024
Benefit obligation at beginning of year$30,944 $33,227 $6,339 $6,693 
Service cost - benefits earned during the period427 487 18 22 
Interest cost on projected benefit obligation1,601 1,586 318 310 
Actuarial (gain) loss629 (1,909)394 84 
Benefits paid, including settlements(2,957)(2,447)(609)(770)
Plan transfers(17)— 17 — 
Benefit obligation at end of year$30,627 $30,944 $6,477 $6,339 
The following table presents the change in the fair value of plan assets for the years ended December 31 and the plans’ funded status at December 31:
Pension BenefitsPostretirement Benefits
2025202420252024
Fair value of plan assets at beginning of year$27,919 $30,098 $1,144 $1,763 
Actual return on plan assets2,562 265 61 117 
Benefits paid, including settlements1
(2,957)(2,447)(483)(736)
Contributions1,153 3 — — 
Fair value of plan assets at end of year28,677 27,919 722 1,144 
Unfunded status at end of year2
$(1,950)$(3,025)$(5,755)$(5,195)
1At our discretion, certain postretirement benefits may be paid from our cash accounts, which does not reduce Voluntary Employee Benefit Association (VEBA) assets. Future benefit payments may be made from VEBA trusts and thus reduce those asset balances.
2Funded status is not indicative of our ability to pay ongoing pension benefits or of our obligation to fund retirement trusts. Required pension funding is determined in accordance with the Employee Retirement Income Security Act of 1974, as amended (ERISA), and applicable regulations.

Amounts recognized on our consolidated balance sheets at December 31 are listed below:
Pension Benefits
Postretirement Benefits
2025202420252024
Current portion of employee benefit obligation1
$— $— $(499)$(455)
Employee benefit obligation2
(1,950)(3,025)(5,256)(4,740)
Net amount recognized$(1,950)$(3,025)$(5,755)$(5,195)
1Included in “Accounts payable and accrued liabilities.”
2Included in “Postemployment benefit obligation,” combined with international pension obligations and other postemployment obligations of $212 and $1,060 at December 31, 2025, and $157 and $1,103 at December 31, 2024, respectively.

The accumulated benefit obligation for our pension plans represents the actuarial present value of benefits based on employee service and compensation as of a certain date and does not include an assumption about future compensation levels. The accumulated benefit obligation for our pension plans was $30,069 at December 31, 2025, and $30,322 at December 31, 2024.

Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income

Periodic Benefit Costs
The service cost component of net periodic pension cost (credit) is recorded in operating expenses in the consolidated statements of income while the remaining components are recorded in “Other income (expense) – net.” Our combined net pension and postretirement cost (credit) recognized in our consolidated statements of income was $(1,121), $(1,817) and $(1,017) for the years ended December 31, 2025, 2024 and 2023.

The following table presents the components of net periodic benefit cost (credit):
Pension Benefits
Postretirement Benefits
202520242023202520242023
Service cost – benefits earned
during the period
$427 $487 $477 $18 $22 $23 
Interest cost on projected benefit
obligation
1,601 1,586 1,876 318 310 340 
Expected return on assets(2,029)(2,212)(2,533)(38)(61)(130)
Amortization of prior service credit(48)(87)(133)(1,837)(1,928)(2,472)
Net periodic benefit cost (credit) before
remeasurement
(49)(226)(313)(1,539)(1,657)(2,239)
Actuarial (gain) loss96 38 1,717 371 28 181 
Settlement (gain) loss
— — (363)— — — 
Net pension and postretirement
cost (credit)
$47 $(188)$1,041 $(1,168)$(1,629)$(2,058)
Other Changes in Benefit Obligations Recognized in Other Comprehensive Income
The following table presents the after-tax changes in benefit obligations recognized in OCI and the after-tax prior service credits that were amortized from OCI into net periodic benefit costs:
Pension BenefitsPostretirement Benefits
202520242023202520242023
Balance at beginning of year$150 $216 $316 $3,066 $4,523 $6,354 
Prior service (cost) credit— — — — — 32 
Amortization of prior service credit(36)(66)(100)(1,392)(1,457)(1,863)
Total recognized in other
comprehensive (income) loss
(36)(66)(100)(1,392)(1,457)(1,831)
Balance at end of year$114 $150 $216 $1,674 $3,066 $4,523 

Assumptions
In determining the projected benefit obligation and the net pension and postretirement benefit cost, we used the following significant weighted-average assumptions:
Pension BenefitsPostretirement Benefits
202520242023202520242023
Weighted-average discount rate for determining benefit obligation at December 315.50%5.70%5.00%5.30%5.60%5.00%
Discount rate in effect for determining
service cost1
5.80%5.10%5.40%5.80%5.10%5.20%
Discount rate in effect for determining interest cost1
5.40%4.90%5.30%5.30%4.90%5.10%
Weighted-average interest credit rate for cash balance pension programs2
4.60%4.60%4.20%—%—%—%
Long-term rate of return on plan assets7.75%7.75%7.50%4.00%4.00%6.50%
Composite rate of compensation
increase for determining benefit
obligation
3.00%3.00%3.00%3.00%3.00%3.00%
Composite rate of compensation
increase for determining net cost
(credit)
3.00%3.00%3.00%3.00%3.00%3.00%
1Weighted-average discount rates shown for years with interim remeasurements: 2023 for pension benefits.
2Weighted-average interest crediting rates for cash balance pension programs relate only to the cash balance portion of total pension benefits. A 0.50% increase in the weighted-average interest crediting rate would increase the pension benefit obligation by $140.

We recognize gains and losses on pension and postretirement plan assets and obligations immediately in “Other income (expense) – net” in our consolidated statements of income. These gains and losses are generally measured annually as of December 31 and accordingly, will normally be recorded during the fourth quarter, unless an earlier remeasurement is required. Should actual experience differ from actuarial assumptions, the projected pension benefit obligation and net pension cost and accumulated postretirement benefit obligation and postretirement benefit cost would be affected in future years.

Discount Rate Our assumed weighted-average discount rates for pension and postretirement benefits of 5.50% and 5.30% respectively, at December 31, 2025, reflect the hypothetical rate at which the projected benefit obligation could be effectively settled or paid out to participants. We determined our discount rates based on a range of factors, including a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date and corresponding to the related expected durations of future cash outflows. These bonds had an average rating of at least Aa3 or AA- by the nationally recognized statistical rating organizations, denominated in U.S. dollars, and generally not callable, convertible or index linked. For the year ended December 31, 2025, when compared to the year ended December 31, 2024, we decreased our pension discount rate by 0.20%, resulting in an increase in our pension plan benefit obligation of $680, and decreased our postretirement discount rate by 0.30%, resulting in an increase in our postretirement benefit obligation of $167. For the year ended December 31, 2024, when compared to the year ended December 31, 2023, we increased our pension
discount rate by 0.70%, resulting in a decrease in our pension plan benefit obligation of $1,994, and increased our postretirement discount rate by 0.60%, resulting in a decrease in our postretirement benefit obligation of $317.

We utilize a full yield curve approach in the estimation of the service and interest components of net periodic benefit costs for pension and other postretirement benefits. Under this approach, we apply discounting using individual spot rates from a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date. These spot rates align to each of the projected benefit obligations and service cost cash flows. The service cost component relates to the active participants in the plan, so the relevant cash flows on which to apply the yield curve are considerably longer in duration on average than the total projected benefit obligation cash flows, which also include benefit payments to retirees. Interest cost is computed by multiplying each spot rate by the corresponding discounted projected benefit obligation cash flows. The full yield curve approach reduces any actuarial gains and losses based upon interest rate expectations (e.g., built-in gains in interest cost in an upward-sloping yield curve scenario), or gains and losses merely resulting from the timing and magnitude of cash outflows associated with our benefit obligations. Neither the annual measurement of our total benefit obligations nor annual net benefit cost is affected by the full yield curve approach.

Expected Long-Term Rate of Return In 2026, our expected long-term rate of return is 7.75% on pension plan assets and 4.00% on postretirement plan assets. Our long-term rates of return reflect the average rate of earnings expected on the funds invested, or to be invested, to provide for the benefits included in the projected benefit obligations. In setting the long-term assumed rate of return, management considers capital markets’ future expectations, the asset mix of the plans’ investment and average historical asset return. Actual long-term returns can, in relatively stable markets, also serve as a factor in determining future expectations. We consider many factors that include, but are not limited to, historical returns on plan assets, current market information on long-term returns (e.g., long-term bond rates) and current and target asset allocations between asset categories. The target asset allocation is determined based on consultations with external investment advisers. If all other factors were to remain unchanged, we expect that a 0.50% decrease in the expected long-term rate of return would cause 2026 combined pension and postretirement cost to increase $139. However, any differences in the rate and actual returns will be included with the actuarial gain or loss recorded in the fourth quarter when our plans are remeasured.

Composite Rate of Compensation Increase Our expected composite rate of compensation increase cost of 3.00% in 2025 and 2024 reflects the long-term average rate of salary increases.

Healthcare Cost Trend Our healthcare cost trend assumptions are developed based on historical cost data, the near-term outlook and an assessment of likely long-term trends. Based on our assessment of expectations of healthcare industry inflation, our 2026 assumed annual healthcare prescription drug cost trend and medical cost trend for eligible participants is 8.25%, grading down to an ultimate trend rate of 4.25% in 2035. For 2025, our assumed annual healthcare prescription drug cost trend and medical cost trend for eligible participants was 8.25%, grading down to an ultimate trend rate of 4.25% in 2032.

Plan Assets
Plan assets consist primarily of private and public equity, government and corporate bonds, and real assets (real estate and natural resources). The asset allocations of the pension plans are maintained to meet ERISA requirements. Any plan contributions, as determined by ERISA regulations, are made to a pension trust for the benefit of plan participants. We do not have significant ERISA required contributions to our pension plans for 2026. We voluntarily contributed $1,150 to our pension plans during 2025, and intend to voluntarily contribute $350 during 2026.

We maintain VEBA trusts to partially fund postretirement benefits; however, there are no ERISA or regulatory requirements that these postretirement benefit plans be funded annually.

The principal investment objectives are to ensure the availability of funds to pay pension and postretirement benefits as they become due under a broad range of future economic scenarios, maximize long-term investment return with an acceptable level of risk based on our pension and postretirement obligations, and diversify broadly across and within the capital markets to insulate asset values against adverse experience in any one market. Each asset class has broadly diversified characteristics. Substantial biases toward any particular investing style or type of security are sought to be avoided by managing the aggregation of all accounts with portfolio benchmarks. Asset and benefit obligation forecasting studies are conducted periodically, generally every two to three years, or when significant changes have occurred in market conditions, benefits, participant demographics or funded status. Decisions regarding investment policy are made with an understanding of the effect of asset allocation on funded status, future contributions and projected expenses. During 2025, the pension trust entered into a series of derivative contracts as part of an additional interest rate hedging strategy. This hedging strategy better aligns the pension asset duration with the liability duration and improves the interest rate hedge ratio. The notional amount of the contracts was approximately $7,300 as of December 31, 2025.
The plans’ weighted-average asset targets and actual allocations as a percentage of plan assets, including the exposure of future contracts by asset categories, at December 31 are as follows:
Pension Assets1
Postretirement (VEBA) Assets
Target20252024Target20252024
Equity securities:
Domestic8  %-18 %14  %12  %8  %-18  %13  %10  %
International5  %-15 %11 9 —  %-10  %5 4 
Fixed income securities39  %-49 %43 44 —  %-14  %9 12 
Real assets11  %-21 %13 15 —  %-6  %1 1 
Private equity13  %-23 %17 19 —  %-6  %1 1 
Other—  %-3 %2 1 66  %-76  %71 72 
Total100 %100 %100 %100 %
1 Excludes interest rate hedging strategy notional value of $7,300.

At December 31, 2025, AT&T securities represented less than 1% of assets held by our pension trust. The VEBA trusts do not hold AT&T securities.

Investment Valuation
Investments are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability at the measurement date.

Investments in securities traded on a national securities exchange are valued at the last reported sales price on the final business day of the year. If no sale was reported on that date, they are valued at the last reported bid price. Investments in securities not traded on a national securities exchange are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Shares of registered investment companies are valued based on quoted market prices, which represent the net asset value of shares held at year-end.

Other commingled investment entities are valued at quoted redemption values that represent the net asset values of units held at year-end, which management has determined approximates fair value.

Real estate and natural resource direct investments are valued at amounts based upon appraisal reports. Fixed income securities valuation is based upon observable prices for comparable assets, broker/dealer quotes (spreads or prices), or a pricing matrix that derives spreads for each bond based on external market data, including the current credit rating for the bonds, credit spreads to Treasuries for each credit rating, sector add-ons or credits, issue-specific add-ons or credits as well as call or other options.

Purchases and sales of securities are recorded as of the trade date. Realized gains and losses on sales of securities are determined on the basis of average cost. Interest income is recognized on the accrual basis. Dividend income is recognized on the ex-dividend date.

Non-interest bearing cash and overdrafts are valued at cost, which approximates fair value.

Fair Value Measurements
See Note 12 for a discussion of the fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.
The following tables set forth by level, within the fair value hierarchy, the pension and postretirement assets and liabilities at fair value as of December 31, 2025:
Pension Assets and Liabilities at Fair Value

Level 1
Level 2
Level 3
Total
Non-interest bearing cash$92 $— $— $92 
Interest bearing cash4 — — 4 
Foreign currency contracts— 3 — 3 
Equity securities:
Domestic equities2,797 — 2 2,799 
International equities1,593 — — 1,593 
Fixed income securities:
Corporate bonds and other investments— 7,007 14 7,021 
Government and municipal bonds26 3,675 — 3,701 
Mortgage-backed securities— 198 — 198 
Real estate and real assets— — 2,403 2,403 
Securities lending collateral1
688 1,484 — 2,172 
Receivable for variation margin2 — — 2 
Assets at fair value5,202 12,367 2,419 19,988 
Investments sold short and other liabilities at fair value(48)(3)— (51)
Total plan net assets at fair value$5,154 $12,364 $2,419 $19,937 
Assets held at net asset value practical expedient
Private equity funds5,029 
Real estate funds1,198 
Commingled funds5,076 
Total assets held at net asset value practical expedient11,303 
Other assets (liabilities)2
(2,563)
Total Plan Net Assets$28,677 
1Securities lending collateral primarily includes cash and government and municipal bonds.
2Other assets (liabilities) include amounts receivable, accounts payable and net adjustment for securities lending payable.

Postretirement Assets and Liabilities at Fair Value
Level 1
Level 2
Level 3
Total
Interest bearing cash$505 $— $— $505 
Equity securities:
Domestic equities3 — — 3 
Total plan net assets at fair value$508 $— $— $508 
Assets held at net asset value practical expedient
Private equity funds6 
Real estate funds9 
Commingled funds197 
Total assets held at net asset value practical expedient212 
Other assets (liabilities)1
2 
Total Plan Net Assets$722 
1Other assets (liabilities) include amounts receivable and accounts payable.
The following tables set forth by level, within the fair value hierarchy, the pension and postretirement assets and liabilities at fair value as of December 31, 2024:
Pension Assets and Liabilities at Fair Value
Level 1
Level 2
Level 3
Total
Non-interest bearing cash$146 $— $— $146 
Interest bearing cash23 — — 23 
Foreign currency contracts— 2 — 2 
Equity securities:
Domestic equities2,608 — 2 2,610 
International equities1,145 — — 1,145 
Fixed income securities:
Corporate bonds and other investments— 6,925 1 6,926 
Government and municipal bonds— 4,274 — 4,274 
Mortgage-backed securities— 267 — 267 
Real estate and real assets— — 2,311 2,311 
Securities lending collateral1
643 961 — 1,604 
Receivable for variation margin4 — — 4 
Assets at fair value4,569 12,429 2,314 19,312 
Investments sold short and other liabilities at fair value(152)(12)— (164)
Total plan net assets at fair value$4,417 $12,417 $2,314 $19,148 
Assets held at net asset value practical expedient
Private equity funds5,138 
Real estate funds1,957 
Commingled funds3,895 
Total assets held at net asset value practical expedient10,990 
Other assets (liabilities)2
(2,219)
Total Plan Net Assets$27,919 
1Securities lending collateral primarily includes cash and government and municipal bonds.
2Other assets (liabilities) include amounts receivable, accounts payable and net adjustment for securities lending payable.

Postretirement Assets and Liabilities at Fair Value
Level 1Level 2Level 3
Total
Interest bearing cash
$816 $6 $— $822 
Equity securities:
Domestic equities1 — — 1 
Total plan net assets at fair value$817 $6 $— $823 
Assets held at net asset value practical expedient
Private equity funds9 
Real estate funds9 
Commingled funds
299 
Total assets held at net asset value practical expedient317 
Other assets (liabilities)1
4 
Total Plan Net Assets$1,144 
1Other assets (liabilities) include amounts receivable and accounts payable.
For the years ended December 31, 2025 and 2024, our postretirement assets did not include significant investments in Level 3 assets, nor were there significant changes in fair value of those assets during the period. The tables below set forth a summary of changes in the fair value of the Level 3 pension assets:
EquitiesFixed Income FundsReal Estate and Real AssetsTotal
Balance as of December 31, 2024
$2 $1 $2,311 $2,314 
Realized gains (losses)— — (315)(315)
Unrealized gains (losses)— — 325 325 
Transfers in— — 319 319 
Purchases— 13 102 115 
Sales— — (339)(339)
Balance as of December 31, 2025
$2 $14 $2,403 $2,419 
EquitiesFixed Income FundsReal Estate and Real Assets
Total
Balance as of December 31, 2023
$2 $1 $2,954 $2,957 
Realized gains (losses)— — 159 159 
Unrealized gains (losses)— — (510)(510)
Purchases— — 291 291 
Sales— — (583)(583)
Balance as of December 31, 2024
$2 $1 $2,311 $2,314 
Estimated Future Benefit Payments
Expected benefit payments are estimated using the same assumptions used in determining our benefit obligation at December 31, 2025. Because benefit payments will depend on future employment and compensation levels; average years employed; average life spans; and payment elections, among other factors, changes in any of these assumptions could significantly affect these expected amounts. The following table provides expected benefit payments under our pension and postretirement plans:
Pension BenefitsPostretirement Benefits
2026$3,460 $664 
20272,955 641 
20282,893 623 
20292,830 520 
20302,765 538 
Years 2031 - 2035
12,516 2,536 

Supplemental Retirement Plans
We also provide certain senior- and middle-management employees with nonqualified, unfunded supplemental retirement and savings plans. While these plans are unfunded, we have assets in a designated non-bankruptcy remote trust that are independently managed and used to provide for certain of these benefits. These plans include supplemental pension benefits as well as compensation-deferral plans, some of which include a corresponding match by us based on a percentage of the compensation deferral. For our supplemental retirement plans, the projected benefit obligation was $1,199 and the net supplemental retirement pension cost was $92 at and for the year ended December 31, 2025. The projected benefit obligation was $1,305 and the net supplemental retirement pension cost was $18 at and for the year ended December 31, 2024.

We use the same significant assumptions for the composite rate of compensation increase in determining our projected benefit obligation and the net pension and postemployment benefit cost. Our discount rates of 5.10% at December 31, 2025 and 5.50% at December 31, 2024 were calculated using the same methodologies used in calculating the discount rates for our qualified pension and postretirement benefit plans.

Deferred compensation expense was $96 in 2025, $152 in 2024 and $101 in 2023.
Contributory Savings Plans
We maintain contributory savings plans that cover substantially all employees. Under the savings plans, we match in cash or company stock a stated percentage of eligible employee contributions, subject to a specified ceiling. There are no debt-financed shares held by the Employee Stock Ownership Plans, allocated or unallocated.

Our match of employee contributions to the savings plans is fulfilled with purchases of our stock on the open market or company cash. Benefit cost, which is based on the cost of shares or units allocated to participating employees’ accounts or the cash contributed to participant accounts, was $546, $565 and $570 for the years ended December 31, 2025, 2024 and 2023.