Farewell to defined-benefit pensions, General Motors edition
February 15th, 2012 at 7:47 pm by Ted Nesi under Nesi's Notes
The Detroit News reports:
General Motors has the largest pension obligation of any company in the United States, and the automaker had been hinting for months that it needed to do something to reduce the risk that liability posed to its financial strength. …
GM, too, eliminated those pensions for salaried employees hired after Jan. 1, 2001. Those people — who make up about 30 percent of GM’s U.S. salaried workforce — already have defined-contribution, or 401(k) plans, instead.
Starting Oct. 1, the approximately 19,000 U.S. salaried employees hired before 2001 will be moved to that plan as well. However, they will retain the traditional pension benefits they earned up to that date.
GM is also offering retirees the option of taking those benefits as a one-time lump-sum payment when they leave the company.
As a reader pointed out to me in passing this item along, GM’s United Auto Workers union took a major ownership stake in the automaker during its bankruptcy. (Technically, the owner is a UAW retiree health trust.) That makes the corporate politics of GM’s decisions all the more interesting.
Tags: general motors, organized labor, pensions, unions, united auto workers
Nesi's Notes covers politics and the economy in and around Rhode Island for WPRI.com. (Twitter: 
This is a statement on the times we live in.
For half a century, we were king of the hill in virtually every economic measure. In 1980, our total accumulated national debt for the entire history of our country was under $1 trillion. In the 3 decades since then, the debt has ballooned to over $15 trillion and growing at a pace that rivals places like Greece.
Unlike countries like Japan (who have a larger debt to GDP ratio than us), we have to ask other countries to finance our debt. Japan does it for the most part through it’s own citizens. Paying the interest on that pesky governmental debt robs from the real economy that makes widgets and provides services (you know, the stuff that drives economic growth to pay for all those pensions)
Our ability to finance the American dream is dropping as fast as our debt is growing. The private sector has already figured this out. The public sector is still two decades behind.