Chrysler won’t offer white-collar pension buyouts, CEO Sergio Marchionne says

Article by Christian A., on June 7, 2012

Chrysler Group won’t be going on the same path as both General Motors Co. and Ford Motor Co. in offering white-collar pension buyouts. Chrysler CEO Sergio Marchionne said that there wasn’t any need for it to do so. Analysts said that this will reduce the bulky pension obligations, which increased to record levels in 2011.

This is something that investors are very worried about. Ford’s offer will be extended to 98,000 employees. On the other hand, GM will make the offer to about 42,000 workers to trade their monthly pension checks for a one-time lump-sum payout. U.S. automakers have looked at pension costs with a lot of worry since the economic downturn a handful of years ago as they have been losing their market shares to foreign-based automakers in the U.S.

In its annual filing, Chrysler said that 2011 ended with an almost $32 billion pension obligation and that it was $6.5 billion short for its pension plans. At the end of last year, Chrysler’s market value was around $7.5 billion. Chrysler has slightly more than 130,000 retirees. Of this figure, around 30,000 are former employees who had an annual salary while the remaining ones are retired hourly workers who the UAW represents.

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