Ford Motor Co., Dearborn, Mich., is expected to use about 15% of its $42 billion in pension plan assets to pay benefits to employees who opt for lump-sum payments - instead of annuities - as part of a voluntary buyout the company offered, sources said.
Some sources also said they expect Ford to shift a major portion of its pension plan assets to a liability-driven investment strategy. But M. Barton Waring, director of client strategy at BGI, said lump-sum payments generally don't prompt an LDI strategy. "An LDI strategy is prompted by funded status, so if a company's funded status is OK, making large lump-sum payments shouldn't make a difference in that regard."
Ford announced late last month that 38,000 of its employees accepted the buyout offer.