Salaried GM retirees hit with 'grueling' pension changes
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What: Local investment adviser and representative John Berkley is sponsoring two question-and-answer forums to address impending changes to pension plans for salaried retirees of General Motors.
When: 9 a.m., Monday, June 25, and 9 a.m., Monday, July 9.
Where: Pontiac Convention Center, 2809 N. Pontiac Drive, Janesville.
Cost: The forums are free.
For more information: Call (608) 756-4618.
JANESVILLE — Several hundred salaried General Motors' retirees and spouses with ties to the assembly plant in Janesville are facing pension plan changes that one local investment adviser says will be "grueling."
A GM retirement group, however, is even more dramatic in its assessment of the changes, saying the automaker is "throwing its retirees under the bus and renouncing its promises to its most loyal former employees."
Earlier this month, GM said it would offer about 42,000 of its 118,000 U.S. salaried retirees a lump-sum buyout on their pension plans.
GM will buy a group annuity contract from Prudential Insurance, which will pay and administer future benefit payments to the remaining retirees.
The automaker expects to complete the transactions—expected to reduce its pension obligation by $26 billion—by the end of the year.
"These actions represent a major step toward our objective of de-risking our pension plans and will further strengthen our balance sheet and give us more financial flexibility going forward," said Dan Ammann, GM's senior vice president and chief financial officer.
The changes do not affect retirees' eligibility for post-retirement health care, life insurance and vehicle discounts.
The changes fall into three categories:
-- Employees who retired between Oct. 1, 1997, and Dec. 1, 2011, can take a one-time, single, lump-sum payment, continue with their current benefit payable by Prudential or sign up for a new monthly benefit paid by Prudential that's based on their marital status.
-- Employees who retired before Oct. 1, 1997, will continue with their current monthly benefit paid by Prudential.
-- Most active, salaried employees and retirees who started getting pension benefits after Dec. 1, 2011, will move into a new GM pension plan with the same benefits.
John Berkley, a local investment adviser and salaried GM retiree, said it is the first group that faces a decision: take the lump sum or not.
"It's a big decision, a grueling decision," he said. "It's creating a lot of concern because it's a change for a group of people who haven't had to make these decisions before."
Berkley is sponsoring two question-and-answer forums to address the changes.
"I'm facing the same decisions," he said.
It's impossible to offer specific advice to retirees, Berkley said. That's because the GM lump sum offers will differ for every employee and will be based on their age, retirement income, marital status and other factors.
"There are advantages to it and disadvantages," he said. "You have to remember that if you take this lump sum, you will become the manager of that money.
"For everyone out there, every situation is different."
Berkley said he expects the forums will be large gatherings of retirees willing to share information.
"Many of these people know this stuff inside and out, and I suspect that all I'll really be doing is passing the mic around," he said.
In a letter to GM Chairman Dan Akerson, the General Motors Retirees Association expressed its "absolute consternation and disgust" with the automaker's decision.
Jim Shepherd, the group's president, said salaried retirees are being offered two choices. In either case, "GM wins and retirees lose," he said.
Taking a lump sum places the retirees' plan assets at risk in the financial marketplace while reducing GM's liabilities and temporarily propping up its balance sheet, he said.
Shepherd said those not eligible for the lump sum offer and all others not offered the choice must accept a third-party annuity and forgo federal protections and any hope for cost-of-living adjustments.
"Never, even in our wildest imagination, could we ever have foreseen that GM would turn around and treat its retirees with such little regard and with such disdain as GM is doing now," he said.
GM is not cutting benefits, Berkley said. Beyond the lump-sum offer, it is only changing the source of future pension payments.
"The annuity can be a good thing and a bad thing," he said. "There is the security question, but if GM were to go back into bankruptcy in five years, people would be pretty happy that their monthly check was not coming from GM.
"The bigger message in all of this is that this is the trend we are seeing in America. It's not just GM, although that's where it is right now. Defined benefit plans are leaving the private sector."
Jun 26, 2012 at 1:07 a.m.
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General Motors announced their plan to reduce pension liability on June 1. The plan is set to reduce pension liability by an estimated 26 billion dollars, and offers select salaried U.S. retirees a lump-sum payment. Other retirees may continue to receive a monthly pension payment. Navigating these choices will be a complicated process and it is suggested that the advice of a competent financial advisor be obtained. To learn more about initial eligibility and the options of the General Motors (NYSE:GM) Pension Buyout plan visit http://www.youtube.com/watch?v=32ZRne7Ao.... A free white paper is also available at this site. The decision deadline is set for July 20, 2012.
Jun 24, 2012 at 8:56 p.m.
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Ruserious: life insurance is the answer. My grandpa would have enough to take care of her through leveraging the amount in premiums and GM wouldn't have the financial burden nor would the tax payer.
But otherwise yes she should live with family or younger family members pay for the elderly. This is customary in many cultures and used to be the norm here too.
Jun 24, 2012 at 5:32 p.m.
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So Mac, when you say "And yes I do believe that my grandma had no right to collect money after my grandpa who was the sole worker passed away"...were you (or your family)prepared to take care of her?
When Social Security was enacted, it was the norm for there to be one breadwinner, and the spouse was his (in many cases) "dedicated servant".
Also, in many cases it was frowned upon for a woman to work outside the home, especially if young children were present.
If the husband died, he may or may not have left her with something. Would you really deny your grandmother this subsistence?
And often (at least when your grandmother was 70) the man would die after a fairly brief period of retirement, thereby having put in more than he withdrew, so let's say the wife can have it just so we know there are no starving widows out there. Or would welfare (or living with you) make more sense?
Jun 24, 2012 at 6:48 a.m.
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luvujvl... I couldn't agree more. People need to take control of their own futures. This is a lump sum of cash you were promised. Take it out, invest it with the help of an investor. There are plenty of companies out there that will set up an individualized plan for survival in this economy, investing YOUR money.
This is not a have's vs have-nots, it is simply a sign of the times. Those of us who take proactive steps to protect our financial futures will thrive. Take responsibility for your own investments!
Jun 24, 2012 at 12:20 a.m.
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"Won't the almighty union step in to help take care of their brothers and sisters?"
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Well, after dopes like yourself voted to re-affirm FitzWalkerstan, not so much. But, hey, enjoy a third world education level and emergency workers that could give a crap about your safety. Oh, nevermind, I forgot, folks like you believe there's and endless line of "servants" to wait on you hand and foot for whatever table scraps you'll give them....let me know how that works out for you.
Jun 23, 2012 at 6:02 p.m.
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Early in the story this quote appears: "It's creating a lot of concern because it's a change for a group of people who haven't had to make these decisions before."
Later: "Many of these people know this stuff inside and out, and I suspect that all I'll really be doing is passing the mic around,"
Yes, this isn't something that most of these people wanted to face but I'm certain they are in a position to make the best decision for the long term. 'Grueling' I'm not sure about. There are a ton of resources out there...John Berkley being one of them.
Best of luck to those making these decision. You'll make the right one.
Jun 23, 2012 at 5:08 p.m.
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The idea behind pensions long ago and Social Security is that you have people putting new money in all the time to take care of the people taking money out and and overall it works as long as people don't live too long and there are plenty of workers to pay in. People are living too long and bankrupting systems (pensions and SS).
By the way a pension and SS is actually more like a Ponzi-scheme if you really think about it. As long as there are "new investors" the people that put their money in first can get their money out, but when the whole thing blows up it is bad news for everyone.
And yes I do believe that my grandma had no right to collect money after my grandpa who was the sole worker passed away, from either SS or GM. It may be hard and cold, but people shouldn't get money for something they never contributed to.
If everyone in WI gave me a dollar, I'd be a millionaire. Its the same logic.
Jun 23, 2012 at 10:56 a.m.
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It simply amazes me that people pit one to the other. You have and I want to take it away. Or if I don't have no one should. Maybe if we all worked harder to have more things would be better. Why do American only want to take things away. I use to think this was the land of plenty and chances to make the best you could. Only now it I want to take away what little you might live your life out on. It is sad to listen to some of you blame everything and one but yourself. What a group we have here. We have beaten ourself and those with all laugh at us.
Jun 23, 2012 at 12:08 a.m.
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Earning a pension is socialism? Macdaddy, I'm so impressed with your courage to demonstrate your own ignorance to the rest of the world as an example.
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The first private pension plan in the United States was created by American Express. In 1875. The first public pension plan was created by the United States Congress in 1792. In other words, pensions are older than the Constitution AND Karl Marx.
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C'mon, Macdaddy, there must be something else you can say so we can laugh at you. Or perhaps you can re-evaluate what sorts of things you're being told and whether you should be listening to them.
Jun 22, 2012 at 11:07 p.m.
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Funny how the middle class are losing their good pay, benefits and pensions, while big corporations are making record breaking profits. Rich vs Poor will be here very soon with no middle class left. Can anyone say "third world country"!
Jun 22, 2012 at 9:16 p.m.
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"She was paid for 38 years after my grandpa retired working for them for 30 years."
Good for her! I'm sure her husband worked very hard for 30 years to help make it possible for The ceo of GM to make over 8 mil a year!
Do you think factory work is sitting behind a desk pushing papers? My father-in-law, and uncle both worked there for 30 years. My uncle hurt his back and has been in pain ever since, even the 4 surgeries to fuse his spine haven't helped, he can hardly move so of course my aunt is his caregiver and unable to work. What should she live on after he dies?
My father-in-law has had both knees and ankles replaced from injuries attained while working at GM. My mother-in-law is 73 never worked, because back in that day women stayed home, the same 'way of life' your gramdmother had.
What are the elderly wives to do when they lived in a time where it was the norm for companies to have pensions?
Your grandmother relied on that money to live, her husband earned it for THEM.
What cold hearted snake thinks his grandmother shouldn't have been given money to live on after her husband (sole supporter) dies?
Jun 22, 2012 at 8:44 p.m.
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"but the days of retiring on a company supplied pension are coming to an end."
Not if you belong to the UAW.
Jun 22, 2012 at 8:24 p.m.
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Macdaddy,
You're right, SS wasn't meant to be tho sole source of income for retirees. It was meant to be part of a "three leggged stool" cosisting of a workers own savings, Social security and their pension from their employer.
You may wish to do a little research on the difference between socialism and communism before you throw those terms around interchangibly.
Jun 22, 2012 at 5:44 p.m.
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I feel so bad for the people who had this pension carrot put in front of them for so many grueling years of hell working in that prison only to be told that their pension is no longer a guarantee. If Prudential goes under, then their annuity payout would be half what than if would be in a pension.
But then again, I'm not planning on going to hell like the nay sayers here are - the haters - the doomed, satan's minion. I pray for you all for your jealous and venom for others is your own poison.
Jun 22, 2012 at 3:28 p.m.
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DANIAS - Excellent comment - To "Leave GM alone" - Well done!
Jun 22, 2012 at 12:30 p.m.
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VNVET7071......and that will solve the problem?
Jun 22, 2012 at 12:05 p.m.
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Case in point:Over half of the profits of GM (company as a whole) go towards individuals that no longer work for the company.
Jun 22, 2012 at 11:39 a.m.
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Bill: look at it from the companies' perspective. People are living very long now a days and they would be on the hook for potentially more money paid out after they stopped working compared to while they were actually working! That is insane to think about.
People need to take personal responsibility and not expect others to always take care of you, unless you want to be a communist. Socialism doesn't work.
Oh and here is a thought, GM paid my grandma for many years after my grandpa who worked there passed away. She never worked for them, but yet they continued to pay her. She was paid for 38 years after my grandpa retired working for them for 30 years. CRAZY.
Oh and one more final thought. This same issue is what social security is going to be facing here shortly and most baby boomers will get the same choice lump sum or less money. People are living too long and social security was not designed to be a retirement program.
Jun 22, 2012 at 10:37 a.m.
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Most companies are eager to change from pensions and retirement benefits supplied by the company in favor of 401K plans. In essence, they are saying, "Here's your own money, save it." The company may or may not add a percentage to the employee's contribution, but the days of retiring on a company supplied pension are coming to an end.
Jun 22, 2012 at 8:36 a.m.
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Wow we need a part 2 of this story so we can bash again!! Sad thing gm people arent complaining the paper is trying to make a story instead of calling it the gazette in should have one of those lying magazine names Gazette just stirring the pot. This town needs to leave GM alone not here no more find some other news to talk about. The person saying goverment motors at least they paid some money back all the bank corps paid no money back but still take fancy trips and huge bonuses but you still bank with them!!!
Jun 22, 2012 at 8:08 a.m.
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This is why I will never buy a GM product.
Jun 22, 2012 at 7:36 a.m.
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Govt Motors, owned by the Govt and the UAW making decisions like this! I am shocked, shocked!
Jun 21, 2012 at 11:18 p.m.
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"Salaried GM retirees hit with 'grueling' pension changes"
SALARIED workers are Non-Union!
Jun 21, 2012 at 9:56 p.m.
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I think its time they quit whining about what GM is doing and move on. It's a business, GM needs to do what it needs to do to remain in business. They should be quite thankful and grateful they have a retirement at all because there are plenty of people who are without a retirement plan; especially in the NON union sector. Whatever the retiree has in their retirement fund is what GM should offer them should they take the annuity. If they do not accept the annuity then they should take a hit. Retirement age is 62+ for the majority not 36+ and many of the retirees are not only getting their GM retirement, but are still working; and in some cases are also collecting Social Security. They don't know how lucky they are to have those funds.
Jun 21, 2012 at 8:57 p.m.
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Won't the almighty union step in to help take care of their brothers and sisters?
Jun 21, 2012 at 7:38 p.m.
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Gee, I'm not sure what to do with this big whopping pile of money. God forbid I have to figure out how to manage it myself, learn some long-range financial skills, or (gasp!) pay a professional financial planner to manage it for me.....nobody ever said I'd have to be responsible for my own future ! No fair !
Jun 21, 2012 at 4:43 p.m.
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Playing My Heart Bleeds for you on the world's tinyest volin.
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