Portugal Telecom agrees pension transfer to state treasury
PORTUGAL - Portugal Telecom has agreed a deal that will see almost €3bn in pension assets transferred to the country's treasury.
Portugal's ministry of finance and public administration, after more than a month of negotiations, announced that it would take responsibility for €2.8bn worth of pension liabilities for three schemes maintained by the commercial telecoms company.
The treasury will now take responsibility for members of the three schemes - Plano de Pensões de Pessoal da Portugal Telecom/CGA, the Plano de Pensões Regulamentares da Companhia Portuguesa Rádio Marconi and the Plano de Pensões Marconi - and transfer them to the Regime Geral de Segurança Social, the state social security system.
Portugal Telecom's most recent quarterly statement for the end of September indicated that the company had €2.3bn in assets in its pension plan, €471m in unfunded liabilities for pension obligations and a further €337m stemming from healthcare obligations.
The transfer to the social security system will therefore also cover workers for health-related matters, such as paternity or maternity leave, as well as unemployment, while the unfunded liabilities will be covered by the company.
The treasury, which is currently evaluating the best method for transferring the assets, said the move would reaffirm government commitment to a universal social welfare system for all workers.
While the Portuguese government currently only holds a 2% share in the company following its privatisation, it possesses enhanced voting rights due to the 500 A shares it holds and can veto major decisions.
In the past, it was able to veto a takeover by Spain's Telefónica of Brazilian mobile phone network Viva, in which Portugal Telecom and Telefónica have holdings.
Telefónica is currently a majority shareholder in Portugal Telecom, along with Norges Bank, BlackRock and UBS, which hold 5.19%, 2.35% and 2% stakes, respectively.
The asset transfer is set to help the government address its budget shortfall, which last year was almost 10%.