Funded levels of GM pension plans up, size of plans down
Reprints
The funded levels of General Motors Co.'s U.S. pension plans inched up in 2012, while the size of plans dropped amid the implementation of GM's trailblazing “de-risking” strategy.
At year-end 2012, the plans were underfunded by $13.1 billion, down from $13.3 billion at year-end 2011, the big automaker reported Thursday. The plans' funding level, though, slipped to 84%, down from 88% at year-end 2011.
The size of the GM plans was dramatically smaller compared to 2011. At year-end 2012, the plans had $81.2 billion in liabilities and $68.1 billion in assets. A year earlier, the plans had $107.7 billion in liabilities and $94.3 billion in assets.
That $26.5 billion reduction in liabilities was the result of twin actions GM took in 2012 to reduce pension plan size. 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, about 13,000 accepted the offer.
In addition, as the second part of its pension de-risking strategy, GM purchased a group annuity from Prudential Insurance Co. of America.
The Prudential annuity replaced benefits that salaried employees who retired before Oct. 1, 1997, received from GM, as well as retirees who declined the lump sum conversion offer.
GM has said the twin de-risking approaches dramatically reduced the size of its salaried U.S. pension plan. On Jan. 1, 2012, the plan had $35.9 billion in benefit obligations and $33.3 billion in assets. In early November, GM reported that salaried plan obligations had fallen to $9.2 billion and assets to $6.1 billion.
Read Next
-
Former GM pension executive joins Mercer's financial strategies group
Milla Krasnopolsky, a former General Motors Co. pension executive, has joined Mercer L.L.C. as a senior consultant and lead strategist for dynamic de-risking solutions in its financial strategies group in New York.
Related Stories
-
Former GM pension executive joins Mercer's financial strategies group
-
-
30% of GM's eligible salaried retirees accept lump-sum conversion offer
