Re: Automaker Pensions Underfunded by $17 Billion

[Jim_Higgins]

Tom wrote:
> Just think jim if the plan fails you will be paying my pension, I thank
> you very much. I guess I will get the last snicker.
>
> "Jim_Higgins" <gordi...@hotmail.com> wrote in message
> news:hpgk1l$mdt$1...@news.eternal-september.org...
>> More GM excellence
>>
>> Automaker Pensions Underfunded by $17 Billion
>> http://www.nytimes.com/2010/04/07/business/07cars.html
>>
>> DETROIT — The pension plans at General Motors and Chrysler are
>> underfunded by a total of $17 billion and could fail if the automakers
>> do not return to profitability, according to a government report
>> released Tuesday.
>>
>> Both companies need to make large payments into the plans within the
>> next five years — $12.3 billion by G.M. and $2.6 billion by Chrysler —
>> to reach minimum funding levels, according to the report, prepared by
>> the Government Accountability Office. Whether the companies will be
>> able to make the payments is uncertain, the report concluded, though
>> Treasury officials expect the automakers will become profitable enough
>> to do so.
>>
>> If either company’s plan must be terminated, the government would
>> become liable for paying benefits to hundreds of thousands of
>> retirees. The effect on the government’s pension insurer, the Pension
>> Benefit Guaranty Corporation, would be “unprecedented,” the report
>> said. The agency manages plans with assets totaling $68.7 billion,
>> less than the $84.5 billion in G.M.’s plan alone.
>>
>> The carmakers’ pension plans were jolted by the downturn, increased
>> liabilities and other factors. G.M.’s plan was overfunded by $18.8
>> billion in 2008, and was then underfunded by $13.6 billion last year,
>> the report said. Chrysler’s plan was overfunded by $2.9 billion in
>> 2008 but underfunded by $3.4 billion last year.
>>
>> The plans cover about 650,000 people at G.M. and 250,000 at Chrysler.
>>
>> The Treasury Department owns 61 percent of G.M. and 10 percent of
>> Chrysler as a result of the emergency loans the carmakers received
>> last year. The government spent $81 billion bailing out the companies
>> and others in the auto industry.
>>
>> The report issued Tuesday said Treasury officials were confident that
>> G.M. and Chrysler would earn enough to allow the government to
>> gradually sell its stakes. But the report warned that the government
>> could push the companies out of business, consequently terminating
>> their pension plans, if their recovery efforts failed.
>>
>> “In the event that the companies do not return to profitability in a
>> reasonable time frame, Treasury officials said that they will consider
>> all commercial options for disposing of Treasury’s equity, including
>> forcing the companies into liquidation,” the report said.
>>
>> In addition, the report said the government’s interests as a
>> shareholder of G.M. and Chrysler could clash with those of pension
>> participants and beneficiaries. “For example, Treasury could decide to
>> sell its equity stake at a time when it would maximize its return on
>> investment, but when the companies’ pension plans were still at risk,”
>> the report said.
>>
>> President Obama has said he wants to sell the government’s stakes in
>> the two companies as soon as is practicable. G.M. executives have said
>> that a public stock offering could happen this year but that the
>> company would need to be profitable and meet other criteria first.
>>
>> G.M. is scheduled to release its financial results for 2009 on
>> Wednesday. Chrysler plans to provide an update on April 21.
>>
>>
>> --
>> Service Guarantees Citizenship
>
We can but wait and see-perhaps a Catholic priest that love boys will
follow you?

--
Service Guarantees Citizenship