General Motors Co. is considering a “discretionary payment” this year to its pension fund for hourly workers, which was 20% underfunded in September.
GM spokeswoman Noreen Pratscher said last week that under federal rules, the company is not required to make a payment this year. But GM is contemplating a payment in light of an additional $1 billion obligation that the hourly pension plan absorbed from Delphi Corp. as part of the supplier’s October exit from bankruptcy, she said.
The automaker also is looking at reducing the plan’s projected future cash requirement, according to an annual funding notice sent in January to GM’s nearly 500,000 hourly retirees and surviving spouses.
“We’ve not made a decision,” Ms. Pratscher said. The payment decision would not necessarily be linked to GM’s recent financial performance, she said.
The funding notice said GM’s hourly pension fund was underfunded by $14.3 billion, or 20% of its $70.5 billion fair-market liability, on Sept. 30. Ms. Pratscher said the September report included the Delphi obligation.
David Barkholz is a reporter at Automotive News, a sister publication of Pensions & Investments.