GM Contributes $4 Bn to Its US Pension Fund

GM recently confirmed the previously announced voluntary $4 billion cash deposit to its United States hourly and salaried pension plans, with $2.7 billion going to the hourly plan and $1.3 billion directed to the salaried plan.

The contribution is another step forward towards GM's goal of fully funding its pension plans and repaying its debt to the taxpayers, after taking a $50 billion loan from the US Government, when it entered bankruptcy protection.

"With a healthy balance sheet, a lower cost structure and focus on revenue generation, we continue to put in place the fundamentals for sustainable success,” said Chris Liddell, GM vice chairman and chief financial officer.

GM's US pension plans were simultaneously remeasured on December 31, 2009 for the 2009 Form 10-K and were underfunded by a total amount of $17.1 billion. The company's pension US plans will next be remeasured at the end of 2010 and their funded status will be included in the 2010 Form 10-K.

Due to the global financial crisis, the weakening financial markets have significantly reduced the value of GM's large pension fund assets, GM's combined U.S. pension assets plunging to $84.2 billion as of Dec. 31 2008, from $104.1 billion at the end of 2007.

The company designed the first modern pension fund in 1940, with the help of the chairman at the time, Charles Erwin Wilson, who said that investments should be done in all stocks, not just in GM. That way, if GM's stock price suddenly collapsed, its pensioners would be fully protected. Unfortunately, pensioners can't be protected if the entire stock market should fall, like it recently happened.