General Motors Corp., Detroit, today announced it will shift its U.S. salaried employees hired after Jan. 1, 2001, to a 401(k) plan beginning next year. The automaker, which announced last month that it would freeze the defined benefit plan for U.S. salaried workers, said employees in the cash balance plan will receive a contribution from GM of 4% of base salary. All employees in the 401(k) plan will also receive a company match of 50% on their 401(k) contributions up to 4% of their annual base salaries.
Salaried employees hired before 2001 will remain in the defined benefit plan and will receive a "reduced retirement benefit" for future accruals. For these employees, the modified future benefit will be based on 1.25% of an average monthly base salary for employees' future years of service.
Also, GM executives who participate in the Supplemental Executive Retirement Plan will also have their retirement benefits frozen at the end of the year. This plan will be amended "to be aligned with the revised U.S. salaried pension plan," according to the release.
GM said the changes will reduce the company's pension expense by an estimated $420 million in 2007, according to a company news release.
Jerry Dubrowski, GM spokesman, was not immediately available to provide further details.