GM is moving its salaried employees from pension plans to 401(k) plans.
In a move to further reduce its future liabilities, General Motors has announced it will switch its salaried employees in the United States from pension plans to 401(k) plans. The Detroit automaker has already begun the shift.
According to Automotive News, about 70 percent of GM's 26,000 U.S. salaried employees are currently enrolled in a pension plan. Those workers will be moved to 401(k) plans by October 1.
GM is also offering lump-sum payouts to salaried workers that retired after December 1, 2011. The lump-sum payments are in lieu of pension payments. GM says about 500 people have retired since December 1.
GM switched to 401(k) plans for new hires on January 1, 2001. About 7,000 of those employees remain at GM and are enrolled in 401(k) programs. The automaker says the move "will give employees more control of their retirement income while certainly putting GM in a better position for long-term financial health."
GM's pension plan woes have been a known stumbling point for investors. Despite improved finances, GM's pension obligations totaled $128 billion in 2010, leaving the company's U.S. pension plan underfunded by $12.4 billion.