Some firms paying insurers to take on ballooning pension costs

Washington

PEOPLE are living longer - and that's bad news for some companies' bottom lines.

As pension plans incorporate new life expectancy estimates into their calculations, investors are glimpsing the financial fallout from ageing societies.

AT&T Inc last month absorbed a US$7.9 billion non-cash charge from rising pension costs, including retirees' longer lifespans. At Northrop Grumman, updated mortality estimates boosted its pension obligations by US$4.5 billion to US$30.5 billion while shareholders in IBM saw their equity shrink by around US$6 billion.

"2014 was a tough year for pension plan sponsors," said Matt Herrmann, a senior consu…