GM's pension plan funding levels slip in 2011Posted On: Feb. 16, 2012 12:00 AM CST
DETROIT—The funded levels of General Motors Co.'s U.S. pension plans declined in 2011 as lower interest rates, which boosted the value of plan liabilities, offset strong investment results.
At year-end 2011, the plans were underfunded by $13.3 billion, up from $11.5 billion at year-end 2010, the big automaker reported Thursday. The plans' funding level slipped to 88%, down from 89% at year-end 2010.
Still, the plans' financial health is much better compared with a few years ago. At year-end 2009, for example, the plans had $16.2 billion in unfunded liabilities and were 84% funded.
Last month, competitor Ford Motor Co. of Dearborn, Mich., reported that underfunding in its U.S. pension plans widened to $9.4 billion, up from $6.7 billion at year-end 2010.
GM's report on the funded status of its pension plans comes on the heels of the company's announcement Wednesday that it is totally freezing its defined benefit plans covering U.S. salaried employees.
That completes a process it began in 2007, when it said employees hired since Jan. 1, 2001, no longer would accrue benefits in the pension plan, with all future retirement plan benefits coming through a GM 401(k) plan.
GM's 401(k) plan now will be the sole retirement plan for employees exempted from the 2007 freeze. For employees hired prior to 1993, GM will make an automatic contribution to the 401(k) plan equal to 6% of pay and bonus. For employees hired on or after Jan. 1, 1993, GM will make an automatic contribution equal to 4% of base pay and bonus.
For both groups of employees, GM will match 100% of employees' salary deferrals, up to 4% of base pay and bonus.