GM ending pension plans for 19,000 workers because company did not reach financial goals

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2/15/12, "GM ending pension plans for 19,000 workers," NY Post, WSJ, Newscore

"General Motors Co. is eliminating pension contributions for the 19,000 US salaried workers who still receive them and switching to 401K contributions, the company said Wednesday.

The auto maker also said it won't give salaried workers pay raises this year, but will offer them an additional week of vacation. Workers in key jobs also will have a shot at bigger bonuses, the company said.

The changes comes as GM prepares to announce on Thursday a record profit of around $8 billion for last year, people familiar with the plan said. The company is looking for ways to reduce its pension obligations and overall costs, while improving quality and productivity throughout the company.

The company also is expected tell its 26,000 salaried workers in the US that they will receive bonuses for 2011, but that the payouts will be reduced from a year ago because the company failed to meet all its financial goals, people familiar with the situation said.

The pension changes, which go into effect Oct. 1, apply to workers hired before 2001. They will keep their pensions, but future compensation will be in through a defined 401K plan. Around 7,000 workers hired after that time already are compensated through a 401K plan.

The reduction comes despite a solidly profitable 2011.

That's because net income is only one factor in determining payouts. A variety of metrics, several of which drive margins, determine the amount. GM is not at the level it wants to be when it comes to margins, the percentage of revenue left after paying expenses, those people said.

The company's margins, dragged down by troubles in Europe, spending on new products and inefficiencies throughout the company, lag many competitors and company executives have made improving that measure a top priority.

Last year, workers received 145 percent of their bonus because the company exceeded its goals for the year.

GM's union-represented hourly workers receive bonuses under a different formula, which includes profitability and quality among the determining factors." via Instapundit

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