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General Motors pension plan funding improves in 2015

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Aided by higher interest rates that lowered the value of benefit liabilities, the funded levels of General Motors Co.’s U.S. pension plans rose in 2015.

At year-end 2015, the plans were underfunded by $10.4 billion, with $61.1 billion in assets and $71.5 billion in liabilities, the automaker reported Wednesday in a 10-K report filed with the U.S. Securities and Exchange Commission. By contrast, the plans were underfunded in 2014 by $10.9 billion, with $65.8 billion in assets and $76.7 billion in liabilities.

GM’s pension plans are substantially smaller than a few years ago, the result of pioneering moves to shrink the plans.

For example, at year-end 2011, the U.S. plans had nearly $109 billion in liabilities and about $94 billion in assets. One year later, the plans had $82.1 billion in liabilities and $68.1 billion in assets.

That roughly $27 billion reduction in liabilities that occurred between 2011 and 2012 was the result of twin actions the Detroit-based automaker took in 2012 to reduce the size of its pension plans.

One of those steps was an offer GM made to 44,000 salaried employees who retired after Oct. 1, 1997, and before Dec. 1, 2011, to convert their monthly annuities to a cash lump-sum payment. In all, GM paid about $3.6 billion to the 13,000 plan participants who accepted the offer.

As the second part of its pension de-risking strategy, GM purchased a group annuity from Prudential Insurance Co. of America for $25.1 billion. The annuity replaced benefits that about 76,000 salaried employees who retired before Oct. 1, 1997, received from GM, as well as retirees who declined the lump-sum conversion offer.