Telecommunications giant AT&T Inc. cautioned investors this quarter about a rising corporate cost would ding its full-year earnings guidance. The culprit was pensions, and in particular, higher interest rates affecting its calculation to tally pension costs.

The company said it expected adjusted earnings per share in the range of $2.35 to $2.45—a range that trailed analyst estimates—because of nearly 20 cents per share of “headwinds associated with non-cash pension costs,” Chief Financial Officer Paschal Desroches said on the company’s fourth quarter earnings call. The higher costs came from higher interest rates, he told analysts, but the funding status of the company’s pension was still strong.

That assessment highlights the good and bad news tied to higher interest rates on corporate pensions. The good: under US accounting rules, the higher the interest rate, the lower the present value of the obligation companies record to provide pension benefits. This means lower liabilities on the balance sheet. The bad: higher interest rates boost the measurement of a separate calculation companies make to determine pension costs, which can reduce their net income.

For companies so far, the good news has outweighed the bad. Corporate pensions are well-funded for the most part, thanks also to a stock market that until recently fueled strong returns on the assets that fund pension obligations. But analysts are watching for the impact if the market continues to whipsaw under rising rates and pension costs tick upward.

“When the market gets choppy and rates move, people care about this issue, without a doubt,” said David Zion, founder of Zion Research Group, which specializes in accounting and tax research for investors.

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