GM to freeze DB plan of salaried workers hired before 2001

General Motors Co., Detroit, on Sept. 30 will freeze the defined benefit pension plans of all salaried workers hired before 2001, said Lynda Messina, communications manager.

Effective Oct. 1, those salaried workers will be moved to an existing 401(k) plan for salaried employees.

In place of the DB contribution, GM plans to contribute 6% of base pay and bonus for the salaried employees hired before Jan. 1, 1993, and 4% for the other salaried employees, said Preston Crabill, director of employee benefits.

The salaried employees already participating in the 401(k) plan receive a GM matching contribution of up to 4% of pay.

As of Sept. 30, GM’s U.S. salaried DB plan had $32.8 billion in assets and $34.1 billion in liabilities, while its U.S. hourly DB plan had $60.2 billion in assets and $68.8 billion in liabilities, Mr. Crabill said.

The hourly DB plan is unchanged.

Mr. Crabill said he didn’t have information immediately available on the total asset value of the existing 401(k), or how many of the affected salaried employees participate in it. Pensions & Investments estimates GM had $14 billion in 401(k) assets as of Sept. 30.

All the affected employees will move to the 401(k) and receive the new GM contribution, regardless of whether they had participated earlier in the 401(k) plan, Ms. Messina said. GM’s 4% matching contribution for the current plan will also continue.

Ms. Messina said GM is freezing the plan because “it will get us (GM salaried employees) on the same retirement plan. It will help employees share in the success of the business, strengthen the balance sheet and reduce risk.”

She added the change to defined contribution from DB has other advantages — portability of participant assets and ability of participants to control how their assets are invested.

Ms. Messina said she didn’t know how much GM would save because of the freeze.