GM Seeks to Fully Fund Pension Funds

By Chrissie Thompson, Detroit Free Press

January 12, 2011

As General Motors seeks to fully fund its pension funds, its chief financial officer plans to change the assets to more bonds and fewer equities -- a move that will bring more stability to GM's own market value.

GM has a $100-billion pension plan to provide for its 700,000 U.S. retirees, who outnumber current employees 10-1.

That U.S. pension plan is twice the size of GM's market value, calculated by multiplying the number of outstanding shares by the current price.

"Small swings in the pension plan have massive changes in the value of the company," Chris Liddell told journalists Tuesday. "That's just not a good way to run it."

Most pension plans consist of stock and debt investments, with high expected returns, Liddell said. GM wants to move to more fixed assets.

In Liddell's ideal pension plan, "the assets exactly match the liabilities, in their maturity and their risk profile," Liddell said.

GM's U.S. pensions were underfunded by $17.1 billion at the end of 2009. At the end of last year, the company made a $6-billion contribution -- $4 billion in cash and $2 billion in stock -- to lower that number.

GM is to update its underfunding number when it reports fourth-quarter earnings in the coming weeks.