GM - Decision time nears for GM, Ford retirees on lump sum offer

Put a pile of money on the table before thousands of retirees from two major carmakers. Will they grab it or stick with a regular monthly check?

Some white-collar General Motors retirees have until July 20 to decide if they want a payout of $300,000 or $500,000 or so. Some experts say offers to blue-collar retirees could be next.

Warning: This could be the start of something new for retirees across the country.

Financial advisers everywhere are watching how a significant lump-sum payout deal plays out with two big carmakers. Pension experts caution that many retirement-plan sponsors could be dangling lump-sum payouts in years ahead. The rules involving how lump-sum payouts could be calculated changed in 2012 — and some say employers could have more incentives down the road to limit their risks associated with managing pension plans.

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GM: GM salaried retirees still protesting pension shift

GM's decision to terminate its salaried pensions and transfer them has drawn anger from many retirees  and some have threatened to stop buying GM vehicles.

Jim Shepherd, the General Motors Retiree Association president, wrote GM chairman and CEO Dan Akerson this month questioning the move, and noting that retirees would lose the protection of the Pension Benefit Guaranty Corp. - the government's pension insurer - along with federal law that governments employee pensions 

GM officials on the call said the July 20 deadline to decide whether to accept the lump sum will not be pushed back - even though some retirees say they have gotten incorrect figures and are awaiting corrected ones.

He said one option may be an informal boycott by individual members. "We've got retirees who are sleeping one or two hours a night and are sick to their stomach," he said.

"We believe that these changes are good for retirees...and for the company, which will see its pension obligation reduced significantly," wrote Brinkley. "Strengthening our balance sheet will allow GM to do something we haven't done in decades -- focus our attention and resources on being the best carmaker we can be. That is good for everyone with a stake in GM's success."

Akerson said this month the company would consider a similar move for hourly employees, but has made no decisions.

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Story Date: 06-22-12

GM: More firms to offload pensions

MetLife Inc. and Prudential are among insurers that expect the GM deal to encourage more corporations to offload plans. Pension liabilities exceed assets by more than $435 billion, according to a Bloomberg review of data disclosed by firms in the Russell 1000 Index of large U.S. companies. Greece, facing demands for austerity measures in exchange for rescue funds, had total debt of about $450 billion at the end of 2011.

There "may be a greater willingness to pull the trigger and execute a transaction," said Robin Lenna, executive vice president of MetLife's corporate benefit funding group. "They have a model. Somebody already did it in a big way."

"The pension world will forever remember this transaction as the beginning of the era of pension de-risking," said Dylan Tyson, head of pension risk transfer at Prudential, the No. 2 U.S. life insurer. "This is a market whose time has come."

Timken Co. is among firms that may follow GM's path. The maker of bearings has spoken with Prudential and other insurers about annuitizing its pensions, which have $2.6 billion in assets and $3.1 billion in liabilities, said Glenn Eisenberg, the Ohio-based company's executive vice president of finance and administration.

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Story Date: 06-20-12