DETROIT – Around 12,600 white-collar retirees of General Motors Co have agreed to accept lump-sum payments in lieu of monthly pension checks from the largest U.S. automaker.
The buyouts will help cut $29 billion, or about one-fifth, from GM's $134 billion global pension obligation, GM said on Wednesday in a statement accompanying its third-quarter results.
That is $3 billion better than GM projected when it first announced its plans to shrink its large pension obligation, one of the few issues left untouched during its 2009 U.S.-financed bankruptcy restructuring.
The automaker offered buyouts to about 42,000 retirees and will shift management of its pension plans for 118,000 salaried retirees to a unit of Prudential Financial Inc.
This transaction is expected to close in early November, GM said. About 30 percent of eligible retirees accepted the offer.
In connection with these transactions, GM will make $2.6 billion in cash contributions to its salaried pension plan, less than the $3.5 billion to $4.5 billion it previously projected.
Additionally, GM will record a $2.9 billion pretax charge in the fourth quarter as a special item. GM earlier estimated a charge between $2.5 billion and $3.5 billion. (Reporting By Deepa Seetharaman; Editing by Gerald E. McCormick)