PHILLIP A. LAMBERT JR. sent a message to Mary Barra that said:
TO NEW CEO MARY BARRA OF GM WHEN ARE YOU GOING TO UN FREEZES THE AIROSPACE PENSIONS IT HAS BEEN SENTS JAN. 1, 2007 TO PRESENT 2019 . INEED MY GMH PENSION TO LIVE ON NOT TO KEEP IT IN THE COMPANY FOR EVER. Pension Freezes
See our list of companies that have frozen or made significant changes to their pension plans.
What does it mean to âfreezeâ a pension plan?
When a company freezes its pension plan, some or all of the employees covered by the plan, stop earning some or all the benefits from the point of the freeze moving forward. Which employees and which benefits depends on the details of the specific situation. Companies have great latitude to change their pension plans. However, they cannot take away any benefit that employees have already earned up to the point of the freeze.
Are there different types of pension freezes?
A plan freeze may completely bar employees from earning any further benefits under the plan. When an employer with a fully funded plan initiates this type of freeze, all employees become immediately 100% vested in everything they have earned under the plan, but they lose the ability to continue earning future benefits.
HUGHES AIRCRAFT FREEZES PENSION
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GM's pension plan would also get a boost from its own sale of Hughes shares to News Corp.
GM's employee benefit plans -- including its U.S. pension fund and its employee health care funds -- hold 330 million Hughes shares. Last month, GM contributed 108.2 million Hughes shares to the pension plan.
Under the deal, Hughes shareholders would swap all their stock on a one-for-one basis for new Hughes shares and then exchange 17.5 percent of those shares for $14 per share in cash or News Corp. stock.
Devine said GM has no requirements to contribute to the pension plan this year to avoid funding penalties. But the automaker would like to add to the pension plan sooner rather than later.
"Our game plan on pensions, to the extent that we can afford it, we like to make contributions earlier than we have to," he said. "The most important issue is getting our pension funded as soon as we can."
GM said earlier this year that it planned to contribute up to $8 billion to the pension plan by the end of 2004. GM also has targeted raising $10 billion in cash this year, partly through asset sales such as the Hughes deal, and from its operations.
The Hughes stake is the latest asset that GM has agreed to sell to raise cash. Late last year, defense contractor General Dynamics Corp. agreed to buy GM's defense unit for $1.1 billion in cash. Last month, GM said it was considering selling the massive commercial mortgage arm of its General Motors Acceptance Corp. unit.
G.M. Freezes Pension Plan
March 8, 2006
G.M. said it would freeze its defined-benefits pension plan and shift to less-expensive retirement programs for 42,000 workers in the United States.
A G.M. spokesman, Jerry Dubrowski, said the company could not estimate how the steps would affect the average worker, only that "it will be a reduction."
But Brian Foley, a lawyer in White Plains who specializes in pension matters, said that for the typical salaried employee at G.M., "this has got to be a significant hit."
The benefits of G.M.'s retired salaried workers are not affected and neither are those of active or retired members of the United Automobile Workers union.
In its freeze-and-shift strategy, G.M. is following similar moves by companies like Verizon Communications, Motorola and I.B.M.
G.M. and other Detroit auto companies face heavy burdens for pension and health care expenses, known as legacy costs, which they estimate are as much as $1,800 a vehicle.
In its announcement, G.M. said employees who were hired before Jan. 1, 2001 -- believed to be the bulk of its salaried staff -- would stop accruing benefits under its current formula. Instead, they would be paid a modified pension benefit based on 1.25 times their monthly earnings for future years of service.
G.M. employees who were hired after Jan. 1, 2001, who currently take part in a type of retirement program called a cash-balance plan, will stop accruing cash benefits.
