US - General Motors Corporation (GM) cited "huge legacy costs" of retirement benefits as the reason for its slump that saw revenues fall from US$193.5bn to $192.6bn in 2005.
Earlier this year, GM announced changes which resulted in accrued benefits in the current pension plan being frozen. Instead, the company implemented a reduced defined benefits scheme for some employees and introduced a new defined contribution plan for the others.
According to the Wall Street Journal, however, the pension plans for GM’s US workers contain around $9bn more than is needed to meet their future obligations.
Reportedly it is the executives’ pension plan that is burdening the company with a $1.4bn liabillity. A Wall Street Journal analysis of corporate filings in fact revealed that executive benefits played a significant role in the decline of American pensions.
By Angele Spiteri Paris
The Next Generation Pensions Committee is on a mission to promote and encourage younger voices in the industry. Kim Kaveh looks at its key objectives
This week's top stories included an analysis finding the cost of equalising guaranteed minimum pensions in schemes could hit FTSE 100 profits by up to £15bn.
Employers whose dividend to deficit recovery contribution (DRCs) ratios fall outside the "normal range" should expect to see higher regulatory scrutiny, although no fixed ratio will be set.
Investment consultants and fiduciary managers should expect a final decision on the investigation into the market to be published by the end of the year, the competition watchdog says.