Move Pension Risk "Off the Table
As you read between the lines remember history.
At the UAW Bargaining Convention in 2002,
UAW President Ron Gettelfinger chose Stephen Girsky,
an analyst for Morgan Stanley, to be the key note speaker.
In 2005 Girsky worked as an advisor to GM’s CEO and CFO.
In 2009 he began to serve on the GM Board of Directors and
as a trustee for the UAW-VEBA, a health care trust for retirees.
Then refer to LB&A#166 for information on cash balance pension plans.
GM aims to move pension risk off table, Girsky says
September 8, 2011
DETROIT (Reuters) -- General Motors Co. recognizes that its pension
deficit represents a risk to the company that management is hoping to
take "off the table" for investors, Vice Chairman Steve Girsky said on
The automaker's pension plan in the United States was underfunded by
$10.8 billion at the end of June, according to a slide presentation
prepared by GM for an investor conference in New York. This does not
include some $2 billion in stock the automaker put into the plan in
Analysts have said the automaker's pension shortfall is among the
biggest risks to investors. The recent drop in interest rates compounds
these issues because it increases the size of the underfunding.
"We want to take the pension risk off the table," Girsky said during
the Credit Suisse Automotive & Transportation Conference.
Girsky told investors that GM did not know how much it will put into
the fund next year. The automaker is not required to make any
contributions to its pension fund until 2015.
"We don't have to put a penny into this thing until 2015 and there is a
long runway from here to there," Girsky said. "That said, we think it's
a risk. The idea is to de-risk the company."
GM's pension situation is "large and volatile," Morgan Stanley analyst
Adam Jonas said in a note this week.
Under GM CEO Daniel Akerson, the automaker has sought to maintain a
"fortress balance sheet" with enough liquidity to support steady
investment in product and technology.
But GM's pension deficit represents one of the major risks to the
company, compounded by the fact that interest rates are now at their
lowest level in decades. A pension is a fixed payment drawn by workers
A lower interest rate increases the underfunding of GM's pension plan.
U.S. Treasury prices fell to their lowest level in at least 60 years
Analyst Jonas wrote in his note: "The U.S. pension plan represents by
far the biggest potential call on cash for GM."