Ford fuels pension plans with $600 million contribution
By Timothy Pollard | October 30, 2012 1:22 pm
Ford Motor Co., Dearborn, Mich., contributed $600 million to its worldwide pension plans in the quarter ended Sept. 30. That included $500 million in discretionary payments to U.S. funded plans “in line with the company's previously disclosed long-term strategy to derisk its funded pension plans,” according to a news release from the company.
According to the company's third-quarter earnings report, the $600 million contribution brings year-to-date worldwide pension contributions to $2.5 billion.
Ford announced plans earlier this year to offer lump-sum pension payouts to about 98,000 U.S. salaried retirees and former vested employees beginning in August. The company is also reducing the risk of its pension plan by reallocating 80% of assets to fixed income and 20% to return-seeking assets.
According to the company's most recent 10-K, Ford had worldwide plan assets of $55.6 billion and obligations of $73.9 billion, for a funded status of 75.2% as of Dec. 31.
Its asset allocation at the end of the year was 56% fixed income; 33.6% equity; 7.5% hedge funds; 5.3% private equity; 0.9% real estate and -3.3% cash and other (which included net pending trade and foreign-exchange purchases and sales).
Asked about longer-term profitability guidance for the company's North American operations, Robert L. Shanks, executive vice president and CFO, said during a conference call on the earnings report that next year's pension expense is likely to increase “as we look at where discount rates are likely to come out, and that would have a negative impact on their results.”