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U.S. to Assume Toyota/GM Joint Venture Pensions

U.S. to Assume Toyota/GM Joint Venture Pensions

By John Crawley

Reuters

WASHINGTON

 

The U.S. agency that insures corporate pensions will assume plans covering 5,800 workers and retirees of a joint venture in California between Toyota Motor Corp <7203.T> and General Motors Co that closes at the end of the month.

Toyota said on Wednesday it has offered $250 million in bonuses to help hourly and salaried workers at the New United Motor Manufacturing Inc (NUMMI) plant.

GM has not offered transition assistance and there is no legal obligation to do so, a spokesman said.

The Pension Benefit Guaranty Corp (PBGC) said on Wednesday that underfunded pensions will be abandoned as a result of the facility’s closure.

The agency planned to seek permission from a federal judge in San Francisco to take over the accounts, which are traditional pensions that cover members of the United Auto Workers (UAW).

GM pulled out of the venture, an independent company for the past 25 years, last year as part of its bankruptcy restructuring. Toyota is doing the same, saying the facility is no longer economically viable.

Despite efforts by California officials to persuade Toyota to keep the factory near San Francisco open, the automaker says its decision is final.

GM’s shares in the partnership are now part of Motors Liquidation Co, which oversees the unwanted elements of GM remaining in bankruptcy.

PBGC’s concern over the poor health of auto industry pensions eased somewhat when GM and Chrysler, with the help of government money, emerged from bankruptcy last summer with their plans intact. But the parts supplier sector remains a concern for the deficit-ridden agency.

Bankrupt Visteon Corp has proposed transferring three of its plans covering 21,000 workers and retirees to PBGC. And the agency has assumed control of plans covering 70,000 hourly and salaried workers at Delphi.

Last week, a bipartisan group of U.S. lawmakers asked the White House to intervene in the Delphi matter on behalf of salaried workers. GM spun off its parts unit to create Delphi in 1999 and contractual agreements with the UAW led GM to add extra funds to hourly pensions when they were terminated.

There was no similar infusion for the 20,000 salaried Delphi employees who say they will receive less overall. The government owns 60 percent of GM.

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