General Motors Co. is making a major move to boost its balance sheet. It is considering a plan to make lump-sum pension payments late next month to white-collar retirees who have made a decision to take a buyout and miss out on a monthly pension check. On August 24, GM will mail pension payments to retirees who have asked for paper checks.
GM spokesman Dave Roman said that the payment will be on August 27 for retirees who wanted a receipt by electronic transfer. Roman didn’t reveal how many retirees accepted the offer. He said that more details about the buyouts will be given in late 2012. He said that retirees who chose the buyout would have until Aug. 23 to withdraw their decision.
These buyouts are included in an overhaul of GM's white-collar pension plan that was revealed last month. GM and rival, Ford Motor Co., have taken a string of steps this year to handle the risks related to their pension obligations, which have put a dent on their share prices. About 118,000 people were affected by GM's restructuring of its salaried pension plan. It’s expected to cut off 25% of GM’s $109 billion U.S. pension liability.
Most of the retirees will get their monthly pension checks from a Prudential Financial Inc. unit rather than from GM beginning next January. However, around 42,000 retirees got the option to get a pension buyout. This option compelled retirees to face difficult questions about their finances and mortality. In several cases, these individual lump-sum payments may result to hundreds of thousands of dollars. Roman didn’t give a range of the potential payments.