DETROIT (Reuters) - General Motors Co spent $3.6 billion on pension buyouts this year for white-collar retirees as part of a plan to cut about one-fifth of its global pension liability.
About 30 percent of 44,000 eligible salaried retirees agreed to take a lump-sum payment in lieu of monthly pension checks, the largest U.S. automaker said in its quarterly securities filing on Wednesday.
GM reported surprisingly strong quarterly earnings earlier in the day, sending its shares up 10 percent to $25.57.
The automaker paid an average of $273,000 to each of the 13,200 retirees that accepted the program. The lump-sum buyouts were paid using pension plan assets, GM said.
In June, the automaker estimated that 42,000 retirees were eligible for lump-sum payments. GM also said it would shift management of pension plans for 118,000 salaried retirees to a unit of Prudential Financial Inc.
The deal is expected to close on November 1, GM said.
The actions will cut $29 billion from GM's $134 billion global pension obligation, GM said Wednesday in a statement accompanying the third-quarter results.
That is $3 billion better than GM projected when it announced plans to shrink its large pension obligation, one of the few issues left untouched during its 2009 U.S.-financed bankruptcy restructuring.
In connection with these transactions, GM will make $2.6 billion in cash contributions to its salaried pension plan, less than the $3.5 billion to $4.5 billion it previously projected.
Additionally, GM will record a $2.9 billion pretax charge in the fourth quarter as a special item. It had earlier estimated a charge between $2.5 billion and $3.5 billion.
(Reporting by Deepa Seetharaman; editing by Gerald E. McCormick and Matthew Lewis)
Source: http://news.yahoo.com/gm-says-12-600-white-collar-retirees-lump-134821072--finance.html
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