General Motors (GM) is getting serious about cutting expenses.
Retirees who were paid salaries will take a hit, as the Detroit-based automaker will cut health care benefits and reduce life-insurance coverage for some who are under 65, according to an internal document obtained by TheStreet.com. GM, which is straining under employee obligations and corporate debt, spent $103 billion to fund so-called legacy pensions and retiree health care costs from 1993 to 2007 alone.
GM, the largest U.S. carmaker, said Feb. 10 it plans to slash 10,000 salaried jobs and lower pay by as much as 10%.
The company will withdraw health care benefits for salaried retirees, surviving spouses and eligible dependents under age 65 who may receive Medicare. The changes take effect Jan. 1, 2010. Starting May 1, 2009, life-insurance coverage provided by GM at two times a worker's salary will be cut to 75% of the salary upon retirement. After 10 years, the rate will be reduced by an additional 25%. Current retirees also will be affected.GM spokesman Tom Wilkinson said the company would establish a company-funded health reimbursement account, called an HRA. GM will make a $260 tax-free monthly contribution to an HRA for affected retirees or surviving spouses. When a retiree reaches age 65, an additional monthly pension payment of $300, announced last summer, will be paid.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV