Salaried retirees at GM arrive at D-day

Staff report

DETROIT

Today is the deadline for 42,000 salaried retirees of General Motors Co. to decide whether to take a lump sum or opt for an annuity as replacements for the company’s pension plan.

The retirement-plan actions will result in an expected $26 billion reduction of GM’s U.S. salaried pension obligation, the automaker said.

GM’s annuity option would come from the Prudential Insurance Co. of America, which is expected to pay a monthly stipend comparable to retirees’ monthly pension check.

Lump-sum payments have been estimated to range between $160,000 to $1.1 million, depending on the retiree’s length of service and final rank and salary.

Approximately 42,000 salaried retirees and surviving beneficiaries will be eligible to receive the lump sum.

GM is purchasing a group annuity contract from Prudential under which the insurer will pay and administer future benefit payments to most of the remaining U.S. salaried retirees.

The transactions are expected to be completed by the end of 2012, after completion of regulatory review.

Prudential would then assume responsibility for the benefits covered by the agreement and begin making the benefit payments in January 2013.

“We appreciate the contributions our retirees have made to the company and we have taken great care in ensuring the security of their retirement benefits,” said Cindy Brinkley, GM vice president of global human resources. “Many of our retirees will now have more flexibility to manage their retirement funds and we are confident that Prudential will provide outstanding service to those receiving a monthly payment.”

Approximately 118,000 U.S. salaried retirees are impacted by these changes in different ways, depending on retirement date and eligibility, GM says.

As a result of the changes to the pension plan for salaried retirees, GM will establish a new plan for active salaried employees. GM will terminate the current salaried pension plan. There is no impact on hourly retirees.