Ford's (F) plan to offer pension buyouts to former workers could start as early as August,...

Ford's (F) plan to offer pension buyouts to former workers could start as early as August, according to a company exec. The first wave of offers will be sent 12K to 15K workers, selected by random. Meanwhile, a GM spokesman confirms that the automaker is considering its own pension buyout initiative.
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Comments (5)
  • badmustang
    , contributor
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    There are over 90,000 salaried retirees. Offers are only being made to them. Typical of the company, the union is excluded because as benefits for Salaried eroded since 1980, the savings gains were always used to subsidize Union benefits which never changed. Salaried employees have always been Ford's whipping post but folks, be sure to be a" team player" to ensure you're doing your part by accepting less than what they promised you when hired in! The offers are on top of the bigger offers to get rid of them 5 years ago. Great morale building.
    1 Jun 2012, 07:29 AM Reply Like
  • n403xv
    , contributor
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    badmustang .... Incorrect ... It is not only for retirees, but includes anyone who Ford has an obligation to, the obligation from Ford's defined benefit pension plans.


    For instance, I did not retire from Ford, I left after 17 years with them. I am entitled to pension benefits when I reach a certain age.


    I received a letter from Ford a few weeks back indicating that they would be sending me an offer to buy me out of their penstion obligation. The offer is to be sent in 2013.
    1 Jun 2012, 10:57 AM Reply Like
  • Tdot
    , contributor
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    Ford is constrained by Union Contract to very specific terms for pensions, health care, and other defined benefits for Union employees. So offering a lump sum buyout is not an option - until the UAW leadership agrees to the specific terms, and the majority of UAW members agree to seal the deal. Probably won't happen before 2015 when the Contract comes up for renewal. If the current Contract offered a lump-sum buyout to pensioners and those considering retirement, then you can bet that Ford would be rolling it out. There is a small possibility of the Union agreeing to open the contract for renegotiation (as happened in 2009) if they feel there is something in their interest to discuss (as was the case in 2009).


    As for non-union Salaried employees, Ford only attempts to remain competitive with other companies, both in terms of costs (pension payments and other benefits) and in treatment of employees ... and that is how it works in the real world.


    As for the specific "white collar" pension buyouts, it is rather similar to winning a (modest) lottery: Pensioners can simply choose now to either take the remainder of their "lifetime" pension value as a lump sum (rumored to be valued at well over a half-million in cash for some pensioners) to add to their existing IRA or 401k plan, or they can continue to take the modest monthly stipend along with Social Security and other retirement benefits until they die.


    It is simply a choice that can benefit both the Company with reducing or stabilizing the growing obligations, and some retirees with meeting their financial goals. For example, some retirees may be able to better use the lump sum, hopefully invested properly, to improve their quality of life, pay down debt, pay bills, or to better provide for their heirs. Again, it is a choice that releases retired pensioners to (hopefully) better manage their finances. But nobody would be obligated to accept the lump sum if they prefer the modest monthly stipend.
    3 Jun 2012, 10:01 AM Reply Like
  • desertman
    , contributor
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    Why does any company pay employees that no longer work for them? Would you continue paying your landscaper, housekeeper or handyman after they leave? Any kind of pension is nuts. Offer a 401k while they work there and wish them well when they leave.
    1 Jun 2012, 05:04 PM Reply Like
  • Tdot
    , contributor
    Comments (8698) | Send Message
    Companies offer pensions in good (hiring) times in order to compete in acquiring the best available employees. In the non-unionized world of competitive salary pay and benefits, those companies that offer the best (or at least competitive) pay, pensions, health care coverage, and other benefits can attract the highly talented employees that are in demand and that they need.


    Yes those benefits can be expensive perks, but that is a necessary "evil" to remain competitive. Companies can only hope that by attracting and acquiring the best of the best employees, that they can turn higher profits to pay for it.


    If having a high quality landscaper, housekeeper, or handyman was absolutely essential for you to stay alive, functional and in business, and you had to compete with your neighbors for the best available ones, and the competitive environment was such that the best demanded a pension and/or other perks, then yes, you would probably have to agree to the terms of the market environment, or face bankruptcy and death.


    Of course that is an absurdity in today's capitalistic reality, as most landscapers, housekeepers, and handymen are not exactly on par in terms of pay and benefits as highly educated automotive engineers and rocket scientists. It is not exactly a classless society in the real world outside of trade unions. But then, in Marxist-Leninist Socialistic Communism, the reverse could be true...
    3 Jun 2012, 09:33 AM Reply Like
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