The decision by Verizon Communications to borrow $3.4 billion to make a discretionary pension contribution was driven by tax considerations and concern over rising Pension Benefit Guaranty Corporation (PBGC) premiums, according to Bob Collie of Russell Investments. According to Verizon CFO Matt Ellis, the $3.4 billion discretionary pension contribution the company is making has a “net present value positive (NPV),” but the math behind that statement is driven by tax considerations and a sharp increase in PBGC premiums. While pension funds have traditionally borrowed money to fund their plans, they essentially substituted one form of debt with another (borrowing to either fund the plan or else to repay a borrower). In a related matter, earlier this month, Richard McEvoy, a Mercer partner, said pension funds are at a “tipping point” in deciding to make contributions or close their pension funds altogether. Another feature driving the push towards making pension contributions is that funds receive a corporate tax deduction due to pre-funding.