How Will GM Manage This $71 Billion Obligation?
The $71 billion General Motors (NYSE:GM) owes to its pension fund will be hanging over the automaker for at least several years more. According to a report by Reuters, the Vice Chairman of GM doesn’t see a discussion coming with the United Auto Workers on the topic until the next big contract negotiations, set for 2015. The $71 billion obligation, much greater in value than General Motors as a whole, continues to trouble investors.
Steve Girsky, Vice Chairman of General Motors, told Reuters that talks over the pension obligation were so important and complex it “would probably have to occur around bargaining” with the UAW union. Currently, both sides are letting the matter go until 2015, though they have agreed the pension obligation — $71 billion at last check — should be addressed for the sake of the automaker’s future.
The topic of pension obligations continues to be a sore spot for GM as the automaker tries to shed the negative associations of the government bailout in early 2009. According to a report by Reuters on September 11, the U.S. auto task force advised GM to not fund the pension of certain employees of the automaker’s past ventures. Government officials believed GM could not afford to pay every employee at that time and survive.