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GM to buy out white-collar pensions, cutting obligations by $26 billion
DETROIT (AP) ' General Motors is changing the way it pays monthly benefits to white-collar retirees, cutting its U.S. pension obligation by $26 billion.
The company will offer 42,000 retirees a lump-sum of cash to stop taking monthly benefits.
It will buy a group annuity for the rest of the salaried retirees, who will get their payments from Prudential Insurance Co. starting in 2013.
The changes will affect 118,000 white-collar retirees.
GM will make $3.5 billion to $4 billion in cash payments to its pension plans to buy the annuity. It expects the move to shrink earnings by $200 million a year because pension income will drop.
Rival Ford Motor Co. announced a similar lump-sum payment plan in April.
Shares of General Motors Co. jumped 3 percent on the change.