Author Topic: Automaker Pensions Underfunded by $17 Billion  (Read 867 times)

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Offline crockspot

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Automaker Pensions Underfunded by $17 Billion
« on: April 06, 2010, 07:17:07 PM »
http://www.nytimes.com/2010/04/07/business/07cars.html

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Automaker Pensions Underfunded by $17 Billion
By NICK BUNKLEY
Published: April 6, 2010

DETROIT — The pension plans at General Motors and Chrysler  are underfunded by a total of $17 billion and could fail if the automakers do not return to profitability, according to a government report released Tuesday.

Both companies need to make large payments into the plans within the next five years — $12.3 billion by G.M. and $2.6 billion by Chrysler — to reach minimum funding levels, according to the report, prepared by the Government Accountability Office. Whether the companies will be able to make the payments is uncertain, the report concluded, though Treasury officials expect the automakers will become profitable enough to do so.

If either company’s plan must be terminated, the government would become liable for paying benefits to hundreds of thousands of retirees. The effect on the government’s pension insurer, the Pension Benefit Guaranty Corporation, would be “unprecedented,” the report said. The agency manages plans with assets totaling $68.7 billion, less than the $84.5 billion in G.M.’s plan alone.

The carmakers’ pension plans were jolted by the downturn, increased liabilities and other factors. G.M.’s plan was overfunded by $18.8 billion in 2008, and was then underfunded by $13.6 billion last year, the report said. Chrysler’s plan was overfunded by $2.9 billion in 2008 but underfunded by $3.4 billion last year.

The plans cover about 650,000 people at G.M. and 250,000 at Chrysler.

--snip--

Today must be pension woe Tuesday.

Offline zeitgeist

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Re: Automaker Pensions Underfunded by $17 Billion
« Reply #1 on: April 06, 2010, 07:29:26 PM »
http://www.nytimes.com/2010/04/07/business/07cars.html

Today must be pension woe Tuesday.

Pension whoa might be a better turn of a phrase.  :beathorse:

Now that ObieWun owns GM shouldn't it just go under FERS like all the other government employees?

Quote
If either company’s plan must be terminated, the government would become liable for paying benefits to hundreds of thousands of retirees. The effect on the government’s pension insurer, the Pension Benefit Guaranty Corporation, would be “unprecedented,” the report said. The agency manages plans with assets totaling $68.7 billion, less than the $84.5 billion in G.M.’s plan alone.

The carmakers’ pension plans were jolted by the downturn, increased liabilities and other factors. G.M.’s plan was overfunded by $18.8 billion in 2008, and was then underfunded by $13.6 billion last year, the report said. Chrysler’s plan was overfunded by $2.9 billion in 2008 but underfunded by $3.4 billion last year.

The plans cover about 650,000 people at G.M. and 250,000 at Chrysler.



« Last Edit: April 06, 2010, 07:32:13 PM by zeitgeist »
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