GM to eliminate pensions for all salaried workers

February 15, 2012
GM to eliminate pensions for all salaried workers
/ The Detroit News
General Motors Co. is eliminating traditional pensions for all U.S. salaried employees, but the automaker is softening the blow by giving all salaried workers an extra week of vacation.
The company said that it would also announce bonuses for its approximately 26,000 U.S. salaried workers during its 2011 earnings call on Thursday. Those bonuses will be tied to GM’s global performance.
GM also said it will give pay increases to workers with critical skills this year, but said there would be no across-the-board raises.
“These changes, I believe, really permit employees to share in the success of the business, while at the same time supporting our ability to be profitable, to strengthen our balance sheet and to reduce risk,” said Cindy Brinkley, vice president of global human resources for GM. “We’re really improving GM’s ability to grow profitably.”
General Motors has the largest pension obligation of any company in the United States, and the automaker had been hinting for months that it needed to do something to reduce the risk that liability posed to its financial strength. Brinkley noted that most other large corporations eliminated traditional, defined-benefit pensions years ago.
GM did, too, for salaried employees hired after Jan. 1, 2001. Those people — who make up about 30 percent of GM’s U.S. salaried workforce — already have defined-contribution, or 401(k) plans, instead.
Starting Oct. 1, the approximately 19,000 U.S. salaried employees hired before 2001 will be moved to that plan as well. However, they will retain the traditional pension benefits they earned up to that date.
GM is also offering retirees the option of taking those benefits as a one-time lump-sum payment when they leave the company.
“They don’t have to do this if they don’t want to,” Brinkley stressed. “But this really will allow employees to invest their pension benefit in another retirement savings programs or do whatever they want to do with that money. It’s really up to them, and really puts the employee in the driver’s seat.”
It would also limit GM’s pension liability for those workers.
These changes will have no impact on current retirees or their benefits, Brinkley said.
All salaried workers will receive the extra week of vacation, whether they were hired before 2001 or not.
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