David Godofsky was quoted in a Compliance Week article discussing the measures automakers are taking to reduce pension risks.
According to the article, GM announced a $26 billion plan to offload its pension obligations associated with 42,000 salaried retirees by offering lump-sum payments to those who choose them and annuitizing the rest through an insurer. GM announced this plan a few weeks after Ford Motor Co. rolled out a lump sum offer to its retirees; however, they didn’t annuitize pension benefits for those who passed on the lump sum offer.
Godofsky said GM will get other companies thinking.
“There are people out there who have never thought about annuitizing,” he said. “They assume they have a plan and they have to live with it. Companies will have to take careful stock, though, to understand the downside.”
“In most cases, it’s going to increase the cost of the plan to de-risk it. So the question of whether you do that depends on how much you worry about the risk and whether you can afford it,” Godofsky said.