GM Retirees Face Crucial Pension Deadline

fromMR

More than 40,000 GM retirees must decide by 5 p.m. Friday whether to take a buyout of their pensions. If they don't, responsibility for their pensions shifts to a private company. Financial planners have been working overtime to try to help people make a decision.

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STEVE INSKEEP, HOST:

You've got to escape from your Escape.

Now, today is an important day for more than 40,000 salaried retirees of General Motors. They're facing a major financial decision. This evening marks the deadline for accepting a pension buyout.

Michigan Radio's Tracy Samilton explains.

TRACY SAMILTON, BYLINE: The GM retirees have two choices: either take a lump-sum payment - which can range from 400,000 to $800,000 - or their pensions will be shifted from GM's books to the private insurance company Prudential.

Dean Thurman is a senior partner with Invest Wise in Bloomfield Hills, Michigan. He says there's no one-size-fits-all answer here.

DEAN THURMAN: Half of the folks we recommend go with Prudential, and the other half we recommend take the lump sum and do a rollover into their own IRA.

SAMILTON: But Thurman says retirees should not take the advice of a golfing buddy or that financial advisor with a can't-lose financial scheme. A number of retirees feel betrayed by the offer. They accuse GM of going back on a promise to take care of them for life.

But Harold Frederick of Adrian, Michigan remains grateful to his former employer of 32 years.

HAROLD FREDERICK: General Motors provided us a great job, great living, great benefits for many, many years.

SAMILTON: Frederick's not saying what he'll do, but figures Prudential Insurance will do just fine taking over for GM.

FREDERICK: You have an option to continue your monthly benefit at the same level you've been at. It's a pretty good option to me.

SAMILTON: What this move does for GM is clear. Those underfunded pensions will be taken off the company's books, freeing up cash reserves and possibly improving the company's stock price.

For NPR News, I'm Tracy Samilton, in Ann Arbor.

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