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GM Pensions
Old 11-22-2008, 04:37 AM   #1
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GM Pensions

Thinking of investing in GM?

This is a bit telling. GM's Salaried worker pension plan is overfunded and the Hourly is significantly underfunded (only 64%).

Of course... taxpayers will have to pickup the slack.

GM executives... Top Management are a sad bunch. The sad part is they could care less... they are just numbers on a book that they hope will go away. But it really represents people with modest incomes trying to buy groceries and pay their heating bill. They have no shame!

PBGC, GM Leaders Negotiate Over Auto Maker's Pension Data
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Old 11-22-2008, 05:28 AM   #2
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Yes, and the sadder thing is I bet (did not read the entire article) the Hourly outnumber the Salaried by something close to 10:1. That makes the "underfunded" part so much larger.
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Old 11-22-2008, 09:20 AM   #3
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It would be a mistake to think that the salaried retirees are all fat cat executives. The salaried retirees are for the most part rank and file engineers, secretaries and low level management (supervisors, etc) at the assembly plant level.

The top guys have yet another retirement plan that is a non qualified plan.

CCH Financial Planning Toolkit | Nonqualified Plan Disadvantages
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Old 11-22-2008, 09:51 AM   #4
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It would be a mistake to think that the salaried retirees are all fat cat executives. The salaried retirees are for the most part rank and file engineers, secretaries and low level management (supervisors, etc) at the assembly plant level.

The top guys have yet another retirement plan that is a non qualified plan.

CCH Financial Planning Toolkit | Nonqualified Plan Disadvantages
The point was living up to their responsibility and fund the hourly worker pension properly along the way. The taxpayer will get stcuk with it and the hourly worker will get a reduced pension.

It looks like the white collar pension may have been phased out back in 2006. New employees are on 401ks apparently. Of course the lifer mgmt execs are in the old pension. It is an eye popper.

As workers' pensions wither, those for executives grow
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Old 11-22-2008, 02:03 PM   #5
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This is a good article. My point is that there are really three pension funds - hourly and salaried which are both qualified, and the executive fund which is non qualified.

I'm not sure why the hourly pension fund is not better funded - I'd think UAW agreements and Federal law would have stipulated that. Maybe someone else has more insight.
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Old 11-22-2008, 02:17 PM   #6
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Be aware that the accounting for an ongoing fund is different from one being turned over to the PBGC. Also, published data is often a year behind; do you think their fund has increased in value this year?
And, the PBGC uses a very punitive formula to calculate your benefits if they take over the plan. My memory is that they use the worst contract within the last 5 years, then calculate what you were entitled to if you retired 3 years ago. If you are under 65, there are serious penalties for your "early" retirement.
If you are an old guy with a small pension promise, you won't lose a lot.
If you are middle-aged with a big pension promise, bend over.
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Old 11-22-2008, 08:19 PM   #7
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Originally Posted by chinaco View Post
The point was living up to their responsibility and fund the hourly worker pension properly along the way. The taxpayer will get stcuk with it and the hourly worker will get a reduced pension.

It looks like the white collar pension may have been phased out back in 2006. New employees are on 401ks apparently. Of course the lifer mgmt execs are in the old pension. It is an eye popper.

As workers' pensions wither, those for executives grow
i've heard some GM retirees make almost $100,000 a year and have medical care that is top of the line. where do you expect GM to get money for this in this economic environment?
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Old 11-23-2008, 04:55 AM   #8
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i've heard some GM retirees make almost $100,000 a year and have medical care that is top of the line. where do you expect GM to get money for this in this economic environment?
"Some" doesn't tell a story. Do any blue collar worker make $100,000 a year or is this a white collar worker (including scientists, engineers, etc.). If this number is associated with earners making $150,000 or more, there are probably very few of these as a percent of total retirees. A better number would be the median or the average depending on what you are trying to understand. If "some" is less than 5%, this is a drip, if "some" is greater than 25% this is a flood.
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Old 11-23-2008, 10:08 AM   #9
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The US auto companies developed almost government type pension plans over the decades when they ruled the industry. A worker could retire at 50 to 55 with almost 90% of their former salary (COLA'd, of course) and top notch medical coverage for life. The days a company can keep doing that are long gone. I hate seeing my tax dollars going to people so they can keep benefits I can't even dream of having.
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Old 11-23-2008, 10:42 AM   #10
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Originally Posted by chinaco View Post
Thinking of investing in GM?

This is a bit telling. GM's Salaried worker pension plan is overfunded and the Hourly is significantly underfunded (only 64%).

Of course... taxpayers will have to pickup the slack.

GM executives... Top Management are a sad bunch. The sad part is they could care less... they are just numbers on a book that they hope will go away. But it really represents people with modest incomes trying to buy groceries and pay their heating bill. They have no shame!

PBGC, GM Leaders Negotiate Over Auto Maker's Pension Data
The link says the PBGC is asking for information. I didn't see anything about 64%. Did I miss something? or is there another link that you didn't post?

I'd expect most large company pension plans are underfunded today. If they average 60% equities, and equities go down "only" 1/3 this year, then the funds lose 20% of their market values. I'm guessing the most of them did not have that much cushion at the end of 2007.

IIRC, GM is a lot less in traditional equities, but they we one of the first pension plans into hedge funds.
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Old 11-23-2008, 12:17 PM   #11
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Originally Posted by 2B View Post
The US auto companies developed almost government type pension plans over the decades when they ruled the industry. A worker could retire at 50 to 55 with almost 90% of their former salary (COLA'd, of course) and top notch medical coverage for life. The days a company can keep doing that are long gone. I hate seeing my tax dollars going to people so they can keep benefits I can't even dream of having.
Maybe we should fix more than the auto industry pensions? Of course, as far as I know there is perhaps one auto worker on the board, so it might be less hazardous to complain about them.

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Old 11-23-2008, 12:44 PM   #12
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I hate seeing my tax dollars going to people so they can keep benefits I can't even dream of having.
Amen. I think this sentiment is going to be rising very sharply in the months ahead.

I know I'm really starting to resent throwing more and more of my taxes at preserving the retirement of other people even as my 401K tanks and I get no relief.
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Old 11-23-2008, 12:53 PM   #13
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I think a fair pension is not one red cent more than I get. Ditto for health care.

Any one that has more savings than me must have stolen it.
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Old 11-23-2008, 01:40 PM   #14
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I think a fair pension is not one red cent more than I get. Ditto for health care.

Any one that has more savings than me must have stolen it.
My pensions have been limited by several companies having layoffs, being taken over (old plan terminated) and me leaving on my own. As the economy slammed my industry, my pension and salary suffered repeatedly. There was no government intervention to keep me whole. For better or worse, the auto workers are now facing the "big one." Any government bailout for people with much better pensions than I'll ever see seems "unfair," if such a term is appropriate. Probably a better word is "unequitable." It's not a question of whether someone has more than mine. It's a question of my taxes going to them when theirs never came to me in a similar situation.

As for healthcare, I'll be on some state's high risk plan unless something changes. Then I can look forward to Medicare. I don't think my tax dollars are well spent if they keep someone in an otherwise failed company getting top dollar coverage for pennies.
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