General Motors Company (NYSE: GM) will provide certain salaried retirees with a lump-sum pension payment offer in lieu of normal monthly pension payments, a move which is expected to reduce the pension obligation of the nation's largest automaker by $26 billion, the company announced Friday.
In addition to the pension buyouts, additional employees will receive continued monthly pension payments through The Prudential Insurance Company of America. The two changes will affect 118,000 salaried retirees and result in $26 billion reduction in obligations. Of those affected by the change, 42,000 will be offered lump-sum pension buyouts.
These actions represent a major step toward our objective of de-risking our pension plans and will further strengthen our balance sheet and give us more flexibility going forward, Dan Ammann, senior vice president and CFO for GM said.
GM will establish a new pension plan for active employees and will terminate the current salaried pension plan. More information is available on the GM retiree website.
General Motors Company (NYSE: GM) shares rose 28 cents to $22.48 Friday afternoon.