The pension funds of GM and Ford were the first to venture down the road of lump-sum payments, but the federal highway law has turned that road into an expressway with at least 10 other companies following suit.
The increase in lump-sum payment offers to vested participants in defined benefit plans comes after this summer's highway law allowed more plan sponsors to offer lump-sum payouts than were permitted under the Pension Protection Act. It also included future hikes in premiums.
Among the companies announcing lump-sum offers since the automakers' offers are A.H. Belo, Sears Holding, NCR Corp., Archer Daniels Midland, Energy Future Holdings, Equifax, New York Times, Visteon, Thomson Reuters and Yum! Brands.
“It's something that was brought to us by our advisers, and I think it's an opportunity to save expenses in the plan,” said Alison Engel, Dallas-based senior vice president and CFO at A.H. Belo Corp., which announced a lump-sum payout offer Oct. 5.
Belo's offer was made to about 30% of the vested participants in its two defined benefit plans. Those participants have benefits with a present value of $30,000 or less. Most have until mid-November to decide on opting out or not, Ms. Engel said.
Ms. Engel said Fidelity Investments, Boston, recommended the specific offer to participants with low balances that “take a lot of administrative expense and time.”
General Motors Co., Detroit, in June and Ford Motor Co., Dearborn, Mich., in April made lump-sum offers to both retirees and former employees who have yet to accrue benefits. But most of the other firms are only making the offer to former employees.