GM to end pension plan for salaried workers, shifts to 401(k) plan in October

Article by Christian A., on February 16, 2012

General Motors will end its pension plan for salaried employees as a way to lessen the risk to its balance sheet, the automaker disclosed. Around 70 percent of the company's 26,000 salaried workers in the United States are enrolled in a defined-benefit (traditional) pension plan. They will be transferred to a 401(k) plan beginning October 1, according to GM's vice president of global human resources Cindy Brinkley.

Eligible salaried employees will continue to receive the benefits accrued based on the pension plan, Brinkley explained. GM also intends to provide lump-sum payouts to salaried workers who retired after December 1, 2011.

This action is also made in order to lessen future pension risk. According to a spokesperson, the payouts cover around 500 recent retirees. Ten years ago, the automaker switched to a 401(k) plan for new hires. Around 7,000 salaried workers who were hired beginning January 1, 2001, are still employed at GM and are part of the 401(k) plan. Brinkley explained that this action will provide employees with more control of their retirement income and at the same time, this places the automaker in a "better position" for long-term financial health.

The company's pension obligations worldwide summed up to around $128 billion at the end of 2010, according to its annual filing with the securities regulators. Its pension plan in the U.S. was underfunded by $12.4 billion while those outside the country were underfunded by $9.9 billion.

The automaker is anticipated to offer an update on the status of its pension plans funding Thursday, when it posts full-year and fourth quarter financial results. Brinkley stated that GM has the biggest pension obligation in the U.S. She further disclosed that about two-thirds of "large, established" corporations in the U.S. like GM have transferred to defined-contribution plans from traditional pensions.

Topics: gm

If you liked the article, share on:

Comments

Recommended

The 2018 Cadillac CTS-V sedan will be getting a new paint job that will give it a unique icy feel. Dubbed the Glacier Metallic Edition, this special model was built...
by - August 23, 2017
During the North American International Auto Show at Detroit in 2015, Hyundai introduced a concept pickup truck they named the Santa Cruz. This model took home the Concept Truck of...
by - August 23, 2017
Porsche introduces the technologically advanced wheels with braided carbon fiber. These will be initially available on the 911 Turbo S Exclusive Series. Being the first car manufacturer to offer such...
by - August 23, 2017
All eyes were turned to the fuchsia pink bespoke McLaren 720S MSO at the 2017 Pebble Beach Concours d’Elegance Sunday. Surely, we can understand why. The one-off supercar, which was...
by - August 23, 2017
Hyundai Motor Group – including both Hyundai Motor and Kia Motors – has disclosed a wide-ranging plan to introduce 31 environment-friendly models in a new development roadmap that aims to...
by - August 22, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries