General Motors announce pension freeze 0

General Motors have announced that they will freeze pensions for salary workers despite the company making huge profits.

Pensions have been frozen in order for a cut down on expenses. There will be annual bonuses paid out thanks to the record profits made in 2011 but no one will receive a pay rise.

A change of pension plan

The company has 19,000 workers who are paid a salary that joined before 2001. These specific workers will workers who no longer a normal pension where payments are guaranteed. They will now receive a 401(k) plan which ensures contributions are solely based upon salaries and bonuses.

30 per cent of the company’s salary workers were hired after 2001. They have already been placed upon that scheme.

Any pension benefits already earned will be kept. The new scheme will be put into force from October the 1st of this year.

A bonus will be paid out but no pay rise

There will be bonuses paid to all 26,000 employees who earn a salary General Motors have confirmed. The exact amount has not yet been confirmed.

Reducing risk

Cindy Brinkley claimed the changed were needed in order to reduce the high risk within the company and up the profitability.

Learning from mistakes

Despite recording record profits, it appears that General Motors are clearly ensuring that the mistakes of the past do not occur again. Previously General Motors needed a bail out from the Government in 2009 following a possible financial collapse amid the crumbling worldwide automotive industry. In other words General Motors will not get ahead of themselves.

Warning signs are already there. European losses were reduced but still made for terrible reading. The restricting of Opel and Vauxhall are now being heavily considered. This could include the famous UK plant Ellesmere being shut down.

Profits beat previous record

Most of General Motors profits derived from America, with the company beating the previous record of $6.7 billion in 1997. Back then pickup trucks and SUV sales are booming. Sales in the United States were down for SUV’s and trucks last year to an all time low but profits were still at a record high.

Surprising

It has been quite surprising news throughout the American automotive industry that General Motors have put employees back on traditional pensions. Many would have thought they would been better rewarded for their hard work last year.

From another perspective, General Motors do not want to seek another bailout from the American Government in the future and are looking at ways of securing their future.