GM Pumps $4 Billion Into Pension Plans
GM Pumps $4 Billion Into Pension Plans
General Motors Co. announced on Thursday it was pumping $4 billion in cash into its underfunded US pension plans in a move described as another step toward clearing up its balance sheet. The payment comes just two weeks after the company's $23 billion initial public offering, the biggest in US history, and only 17 months after coming out of a government-funded bankruptcy restructuring.
The automaker announced in October that it would funnel $6 billion into its pension plans, which were estimated to be underfunded by $27 billion at the end of 2009. Of that $6 billion, $4 billion was to come from cash reserves and the other $2 billion was to come from shares of common stock. Of the $6 billion, $2.7 billion was paid into the pension plan for US hourly workers while $1.3 billion went into the plan for salaried employees in the US. The company US pensions, which are responsible for benefits for 688,000 people, were short of their obligations by $17.1 billion at 2009's end.
A GM spokesman says no time table has been set to make the stock payment into the pensions, but the company wants to do it as soon as possible. Economists say that the company's pensions are likely closer to their obligations already as a result of growth in the stock market in 2010. The plans' values will be re-evaluated at the end of the year, company officials say.
General Motors Co. announced on Thursday it was pumping $4 billion in cash into its underfunded US pension plans in a move described as another step toward clearing up its balance sheet. The payment comes just two weeks after the company's $23 billion initial public offering, the biggest in US history, and only 17 months after coming out of a government-funded bankruptcy restructuring.
The automaker announced in October that it would funnel $6 billion into its pension plans, which were estimated to be underfunded by $27 billion at the end of 2009. Of that $6 billion, $4 billion was to come from cash reserves and the other $2 billion was to come from shares of common stock. Of the $6 billion, $2.7 billion was paid into the pension plan for US hourly workers while $1.3 billion went into the plan for salaried employees in the US. The company US pensions, which are responsible for benefits for 688,000 people, were short of their obligations by $17.1 billion at 2009's end.
A GM spokesman says no time table has been set to make the stock payment into the pensions, but the company wants to do it as soon as possible. Economists say that the company's pensions are likely closer to their obligations already as a result of growth in the stock market in 2010. The plans' values will be re-evaluated at the end of the year, company officials say.
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