“Essentially, GM has made its entire salaried pension [for retirees] go away by paying out a little more than 10 per cent of its … cash balance. As Forrest Gump said, ‘That’s good. One less thing’.”1
In June, General Motors (GM) announced that it was de-risking its salaried pension plan and reducing its pension obligations2 by US$26 billion through a combination of lump sums and annuities.
1 Source: Morgan Stanley, Sales and Trading. June 4, 2012
2 Unless otherwise noted, pension obligation refers to the amount being shown in a company’s financial statements. This is usually referred to as the ‘accounting basis.