GM Makes Strong Move Away From Pensions
GM announced last Friday that is will make a strong move to decrease its pension liabilities. For retirees, they will offer over 40,000 them a lump-sum payment of cash to end their monthly benefits. The rest of the 118,000 salaried retirees and spouses in the U.S. will be serviced by a group annuity that GM will purchase.
Their overall plan is to unload $26 billion in pension liabilities from their books in a move that experts say are likely to become a trend as companies with defined benefit retirement plans attempt to decrease their company’s risk and administrative costs. As more and more companies continue to move away from defined benefit plans [ex.-pensions] to other plans such as defined contribution plans [ex.-401(k)s], it is becoming more and more important for individuals who are planning to retire to assess their need of purchasing an annuity in order to have the assurance that they will not outlive their assets.
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