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Salaried Pension Plan Analysis

Dear GMRA Member,

A GMRA financial team has completed the analysis of the GM Salaried Pension plan. The findings are based on publicly available data such as ERISA documents and schedules, Deloitte & Touche audit statements, GM’s 10-K filing with the SEC, in addition to interviews and meetings with the GM Director of Pension & Savings Plans and the GM Executive Director of Employee Benefits and HR Operations, the Department of Labor and legal counsel, among others. 

The team focused on the following areas:

- Annual Report summaries and the Annual Funding Notice,

- Plan earnings and benefit payments,

- Plan assets and liabilities,

- GM contributions,

- Administration fees, and

- Number, status and ages of Plan participants. 

Note that all of the information in the report is based on data for plan years 2003-2007. Financial data for plan year 2008 (October 2008 through September 2009) will not be available until August 2010.

First, the good news. It is GMRA’s assessment that the fund assets have been well-managed both prior to, and during, the economic downturn. Despite the investment strategy of mitigating risk, rather than maximizing returns, the earnings have been equal to, or better, than major market trends. Barring new economic events, the earnings on the Plan assets are expected to increase. In our conversations with GM, and confirmed in GM’s 2009 10-K financial statements, GM has projected that they will not need to make contributions to the Salary Pension Fund until 2013, 2014 and 2015. 

However, there are significant risk factors that merit continued monitoring by the GMRA. For example, the funded percentage drop to 89% in 2009, from 106% in 2008, is a result of increases in liabilities and the economic downturn. We see no reason to believe liabilities will decrease. Market performance and the global economic skid is proving to be unpredictable and could also have a considerable impact on assets in the fund. In addition, management of the fund and any modifications to the plan could significantly affect funding levels. And finally, increases in payouts from the plan such as, separation payments, restructuring costs, liability increases due to early retirements, or use of the fund for other daily operating expenses, could further compromise the health of the plan. 

GM has the authority to modify the plan under current ERISA law. As an organization, GMRA intends to work with the NRLN to push for new legislation that prevents companies from modifying pension plans to benefit their bottom line at the expense of retirees and future pension recipients. Our goal is that GMretirees do not experience further and unnecessary take-aways. 

As a GMRA registered member for 2010, the financial data is available to you at the GMRA website: www.gmret.org. In fairness to supporting GMRA members, we will not be distributing the analysis further, and hope we can count on you to treat the report as privileged information as well. 

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This analysis was completed by a GMRA financial team and is for GMRA member informational purposes only. GMRA makes no representation or warranty as to the accuracy or completeness and does not assume liability for damages of any kind relating to such data. This report should not be relied upon as a basis for financial planning decisions. Consult your personal financial planner before making any such commitments. GMRA will continue to monitor relevant information and may provide updated analyses to GMRA members on the GMRA website at www.gmret.org.