General Motors Co., Detroit, increased the U.S. pension plans' long-term expected rate of return on assets to 6.6% from 6.2% in December following an investment policy study, the company disclosed in a 10-K filing on Tuesday.
It is the first increase in the plans' expected rate of return since 2014. The plan's expected rate of return was 6.2% for the year ended Dec. 31, 6.3% for 2016, 6.4% for 2015, 6.5% for 2014 and 5.8% for 2013.
GM also disclosed in the filing that it plans to contribute $900 million to its non-U.S. pension plans in 2018. The contribution to the non-U.S. plans follows total contributions to the plans in 2017 of $1.153 billion. GM contributed $1 billion and $1.1 billion to the plans in 2016 and 2015, respectively. In 2018, GM also plans to contribute $70 million to non-qualified U.S. pension plans. Total contributions to U.S. plans were $77 million in 2017 and $2.1 billion in 2016.
GM said that based on its assumptions it does not anticipate having any required contributions to U.S. plans over the next five years and plans on making a total of $1.2 billion over the same time period to its Canadian and U.K. plans.
As of Dec. 31, U.S. pension plan assets totaled $62.64 billion, while projected benefit obligations totaled $68.45 billion, for a funding ratio of 91.5%. Non-U.S. pension plan assets as of that same date totaled $14.5 billion, compared to projected benefit obligations of $22.79 billion, for a funding ratio of 63.6%.
The U.S. pension plan discount rate for 2017 was 3.53%, down from 3.92% the year before, while the non-U.S. pension plan discount rate for 2017 was 2.66%, down from 2.88% the previous year.
The target allocation for the U.S. plans is 61% fixed income, 24% other and 15% equities, and the targets for the non-U.S. plans are 56% fixed income, 26% other and 18% equities.
