General Motors said today that it would freeze its defined benefit pension plan for U.S. salaried employees, who instead will receive contributions to a defined contribution plan or 401(k). GM’s latest attempt to shore up its vastly underfunded pension plans will become effective 30 September 2012.
GM’s global pension plans were underfunded by $24.5 billion, an increase from $22.2 billion at the end of 2010, GM reported in its year-end results earlier today. Of that potentially crippling debt, $13.4 billion comes from promises GM made in the U.S. to its salaried workers.
The change will affect GM’s U.S. salaried employees hired prior to 1 January 2001, estimated at 19,000. Those GM white-collar workers will stop accruing fixed retirement benefits on 30 September and begin receiving defined contributions. Salaried employees hired after that date are already covered by a so-called defined contribution plan.
GM’s U.S. defined benefit pension plans earned asset returns of 11.1% in 2011. They ended the year 88% funded, largely unchanged from 89% funded a year ago.
White-collar workers also won’t get automatic salary increases this year, though the automaker will offer bonuses. GM’s white-collar workers haven’t had an automatic pay increase since February 2010.
GM is also considering other initiatives beyond the changes it made to salaried workers’ pension plans to improve the funded status, CFO Dan Ammann said on a phone call with reporters today.
About Ken Zino
Ken Zino, publisher (kzhw@aol.com), is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
Zino is at home on test tracks, knows his way around U.S. Congressional hearing rooms, auto company headquarters, plant floors, as well as industry research and development labs where the real mobility work is done. He can quote from court decisions, refer to instrumented road tests, analyze financial results, and profile executive personalities and corporate cultures.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
