Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (48519)	6/30/2012 12:35:40 PM
From: Sergio H	Respond to of 78567

<My impression is that GM paid an extra 3-4B$ to Prudential to get rid off 20B$ in gross (not net!) liability and convert the pension into a PRU annuity basically. This makes sense PRU does not sell 8% annuities (the assumed rate of return in most pension plans) so extra funds are needed to make up for the shortfall. I don't know the gross liabilty for GM's pension plant but it has to be in the hundred of billion $, so doing a PRU like deal will require a lot of cash outlays.> $29 billion to Prudential for the annuity after pumping $3-4 billion into the fund, cutting GM's liability for salaried employees from $36 billion to $10 billion. GM's pension liability at the end of last year was $134 billion. The unfunded portion was $25 billion. Expectations are that this new plan will lower their unfunded liability to $24 billion or a 4% reduction. I can see why you are not impressed.