BERKELEY HEIGHTS, N.J. - TCI Communications Inc.'s $1 billion 401(k) plan will be absorbed by AT&T Corp., now that the companies have merged.
AT&T Investment Management Corp., will oversee TCI's assets.
"On July 1, we will be changing the TCI plan to include the same investment opportunities that reside in the AT&T savings plan and move them into the trust and move the record keeping to Fidelity," said Brian Byrnes, AT&T's human resources director of retirement plans.
New England Retirement Services was TCI's record keeper; Fidelity Investments, Boston, is AT&T's record keeper.
TCI, Englewood, Colo., did not have a defined benefit plan, and its employees will not be participating in AT&T's plan, Mr. Byrnes said.
AT&T has a $9.2 billion defined contribution plan for managers, a $2.6 billion defined contribution plan for union employees, a $9.4 billion cash balance plan for management employees and a $9.1 billion defined benefit plan for union employees. They will be unaffected by the TCI move.
TCI's employees will continue to receive a more generous match than AT&T's. The TCI match is 100% of the plan participant's contribution, and employees can contribute 10%, subject to the IRS limitation.
Under AT&T's 401(k) plans, the company matches 66 2/3 on the first 6% of pay contributed by the employee. AT&T employees can contribute between 2% and 16%, up to the Internal Revenue Service limitation, Mr. Byrnes said.
"They had a different approach," Mr. Byrnes said. "They decided to provide retirement in their defined contribution plan. Their match is more lucrative, but AT&T has a traditional defined benefit plan."
TCI participants now will have the same 10 options -- including company stock -- offered to AT&T participants, said Robert Angelica, president and chief investment officer of AT&T Investment Management.
AT&T groups its options into four categories: company stock; custom, or manager-of-manager portfolios of U.S. equities, U.S. fixed income and international securities overseen in-house; three Fidelity funds (Magellan, Equity Income and money market); and strategy funds, three global balanced portfolios with different mixes of stocks and bonds ranked by risk.
For now, AT&T executives are not certain about offering a tracking stock -- the Liberty Media Ventures Group -- that would reflect TCI's post-merger performance, he said.
Immediately before the merger with AT&T, TCI had combined the assets and businesses of two subsidiaries, Liberty Media Group and TCI Ventures Group, according to documents filed with the Securities and Exchange Commission last month. TCI employees had had tracking stocks from each subsidiary as options.(These are classes of TCI stock intended to reflect the results and track the performance of two groups of TCI assets.
The former TCI plan also will gain a loan feature, which the AT&T plan already has, Mr. Byrnes said.
The old TCI plan had six other investment options that will be eliminated: stable value; balanced; core equity; international equity; domestic growth equity; and domestic small-cap. Mr. Byrnes would not identify the managers.
Separate from the TCI merger, AT&T executives are considering modifying the investments in the 401(k) plan, but they don't know when these changes will be made, Mr. Angelica said.
Also unknown is the fate of Liberty's $49 million 401(k) plan, said Mr. Byrnes. The Liberty plan was a mirror image of TCI's plan, he explained. Should it remain separate, it probably will be administered at the group's headquarters in Denver by TCI pension staff, he added.
"The TCI pension plan administration staff won't be downsized," Mr. Byrnes said. TCI had outsourced more of the plan administration and had relied more heavily on outside counsel than AT&T does in its normal administration, he explained.
In an unrelated action, AT&T also plans to convert its defined benefit plan for union employees into a cash balance plan July 1, Mr. Byrnes said. Its defined benefit plan for non-union employees was converted into a cash balance plan on Jan. 1, 1998 (Pensions & Investments, June 15).
AT&T executives decided to convert to cash balance to gain more employee appreciation, have simpler record keeping and be more competitive, Mr. Byrnes said. "To have certain age and service requirements to access the pension in today's environment does not sit well with many employees."