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March 08, 2006 at 06:25 AM
The world’s largest auto manufacturer has halted contributions to pension benefits for its most recent U.S. salaried employees, saying it wants to broaden its use of defined contribution plans.
General Motors Corp., Detroit, says it is moving salaried employees hired on or after Jan. 1, 2001 entirely to a defined contribution plan for future service. Salaried employees hired before that date will remain in the defined benefit plan, GM says. However, they will receive a reduced retirement benefit for future accruals under a new career-average pay formula. Pension benefits earned before the transition date will be preserved.
The changes do not affect the benefits of GM’s current U.S. salaried retirees or the vested benefits of former employees, according to GM.
“These decisions are difficult but necessary to position GM for future success and preserve employees’ earned retirement benefits,” said GM chairman and chief executive officer Rick Wagoner.
