DETROIT (AP) _ General Motors Corp. said Tuesday that it will shift its pension benefits for salaried employees from a defined benefit plan to a plan that relies more heavily on employee contributions.
Effective Jan. 1, GM will freeze the accrued pension benefits for U.S. salaries employees. Salaried employees hired on or after that date will move exclusively to a defined contribution plan, and GM will contribute a certain amount to their 401(k). Salaried employees hired before Jan. 1 will remain in a defined benefit plan but will get reduced benefits under a new formula.
GM announced last month that it would make the change to reduce its pension costs. The changes are expected to reduce GM's year-end 2006 pension liability by approximately $1.6 billion.
``These changes will reduce financial risks and future costs for GM, while protecting current retirees' and employees' earned pension benefits and providing competitive and fair retirement benefits going forward,'' GM Chairman and CEO Rick Wagoner said in a statement.