Official: GM reducing pension burden further with lump sum buyouts

Filed under: GM, Earnings/Financials

General Motors is moving to reduce the company's pension costs by $26 billion. The automaker is offering around 42,000 of its salaried retirees and surviving beneficiaries a one-time lump-sum payment in lieu of their current monthly benefit. In addition, GM plans to shift its salaried pensions to Prudential Insurance Co. of America. All told, the move will cost the manufacturer between $3.5 billion and $4.5 billion, including funding the plan and purchasing an annuity contract from Prudential. GM holds one of the world's largest pension obligations in the world, currently worth around $134 billion.

The shift should cut the company's worldwide pension liabilities to around $106 billion, while salaried pension obligations will drop from $36 billion to $10 billion. Even so, the shift to Prudential and lump-sum payouts will do nothing to lessen the automaker's hourly pension burden. Currently, GM holds hourly pension plans with $71 billion in liabilities and $61 billion in assets, though the manufacturer said the salaried pension shift "sets a precedent for additional actions." Check out the full press release for yourself.

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GM reducing pension burden further with lump sum buyouts originally appeared on Autoblog on Mon, 04 Jun 2012 11:29:00 EST. Please see our terms for use of feeds.

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Source: http://www.autoblog.com/2012/06/04/gm-reducing-pension-burden-further-with-lump-sum-buyouts/

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