Ford Motor Co. will begin to offer lump-sum pension payout offers to 98,000 retirees and former employees starting as early as August, according to a report in Reuters. The move could shed up to one-third of the company’s US$49-billion pension liability, which could result in improvements to Ford’s credit rating and stock price.
“We think if we can get at least a meaningful number of employees, this will take billions of dollars of obligations potentially off the table,” Ford chief financial officer Bob Shanks told Reuters.
Ford has indicated that, initially, between 12,000 and 15,000 plan members will be given the option to receive a one-time pension payment in lieu of monthly pension cheques. Those employees who accept the offer will assume responsibility for managing those retirement funds.
At the end of 2011, Ford’s global pension plan was underfunded by $15.4 billion.