Bailout Watch 383: White Collar Buyouts Banned
The Freep reports that GM will not be offering the customary buyout offers to its white-collar employees as it seeks to cut its salaried ranks by double digit percentages. Huh? The General’s offering its UAW workers $20k and a $25k car voucher to bugger off. Turns out GM’s bailout agreement with the government prohibits the ailing automaker from using GM’s pension fund to pay for those kiss-off packages– as it has done in the past. Specifically, the loan states that “the prohibitions on benefit increases under this covenant include… a prohibition on the creation or… payment of any obligations associated with any plant shutdowns, permanent layoffs, attrition programs or other workforce-reduction programs after the effective date.” And guess what? With the pension fund piggy bank cut off, there’s nowhere else to get the money!
The Freep says that’s why the current UAW buyout offer is so much worse than the $100k+ packages of the past. As UAW workers are contractually guaranteed work through the end of the contract period, GM is still willing to dip into its (dwindling) operating cash to buy them out. White collar workers, on the other hand, meh. They can just be fired.
So that’s what’s happening. In fact, GM has even reduced severance pay for its hapless managers (gee, these guys should unionize) from the traditional one month salary per year served.
More by Edward Niedermeyer
Comments
Join the conversation
I wonder where Chrysler is getting the cash for the new round of hourly buy-outs over there? $75k cash $25k voucher for new car $15k to cover taxes on voucher 6 months of healthcare Accrued pension can be tapped at 65 Employee discount for 1 year Is this tapped from the pension fund? Do they figure the company is toast anyway so why not throw some cash at anyone smart enough to take it?
No surprise here. Gotta get while the gettin's good.
well if the government is going to trim salaries of executives the little guys are going to pay for it too. The law of unintended consequences.
When GM announced their Pension Buyout Plan on June 1, July 20 seemed far enough away. Now that we're in July, that decision deadline might be feeling a little too close for comfort. Understanding the consequences of the three decisions available to select retirees is a lot of work. In fact, you may have found the phrases and terms require some sort of degree to fully understand. It's okay to be feeling this way; that's exactly why seeking the advice of a professional financial planner has been encouraged. The planners at LJPR, LLC of Troy, MI have years of experience assisting retirees like you navigate the muddy waters of pension plan decisions. They have created an informative video specific to the GM pension buyout options as a service to all GM retirees. You can watch it by clicking http://youtu.be/32ZRne7AoTQ. You still have time to make an educated decision about your role in the GM Pension Buyout Plan.