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Blue Oval Pensions hit that nasty fully funded pension snag.
http://www.calgaryherald.com/busines...205/story.html
Ford faces $1.76B pension gap
By Eric Lam, Financial PostSeptember 24, 2009
Ford Motor Co. of Canada Ltd. has asked Canadian Auto Workers union members to approve a pension funding relief plan to help the auto-maker deal with a $1.76-billion shortfall.
In a letter sent to workers in August, Ford announced plans to enter into Ontario's new solvency funding relief program, which will allow the company to make up for its pension funding deficit over a 10-year period instead of five.
Ford needs at least two-thirds approval to proceed.
"Please rest assured that this proposal only impacts the timing of funding the 2008 deficit and does not affect current pension benefits accrued by active employees or paid to retirees or their beneficiaries," Ford says in the letter.
A valuation of Ford's Plan 1 pension plan at the end of December 2008 showed the plan held assets of about $2.9-billion. This means Ford could have paid out only about 62% of total liabilities if the plan were to have ended on that date.
Ford and the CAW have been in contract negotiations for the past two weeks, with the company looking for concessions similar to those the union gave General Motors Co. and Chrysler Group LLC this year to help preserve jobs for Canadian autoworkers.
The Ontario and federal governments have pitched in with some $13-billion in bailout cash to prop up the two companies.
Ford, which has avoided bankruptcy protection and has not asked for bailout money in Canada or the United States, is nonetheless looking for any opportunities for "cash conservation" to help improve its bottom line.
"In the absence of [funding relief ], Ford's contribution to the plan to fund the normal cost of the plan and all special payments is estimated to be $160.5-million a year over the first five years and $38.5-million over the next five years," the letter says.
Under the plan, Ford would save $5-million a year for the first five years, but would have to up its contributions to $44.8-million a year in the last five years.
Workers have until Sept. 25 to file a written objection with Ford.
erlam@nationalpost.com
© Copyright (c) National Post
By Eric Lam, Financial PostSeptember 24, 2009
Ford Motor Co. of Canada Ltd. has asked Canadian Auto Workers union members to approve a pension funding relief plan to help the auto-maker deal with a $1.76-billion shortfall.
In a letter sent to workers in August, Ford announced plans to enter into Ontario's new solvency funding relief program, which will allow the company to make up for its pension funding deficit over a 10-year period instead of five.
Ford needs at least two-thirds approval to proceed.
"Please rest assured that this proposal only impacts the timing of funding the 2008 deficit and does not affect current pension benefits accrued by active employees or paid to retirees or their beneficiaries," Ford says in the letter.
A valuation of Ford's Plan 1 pension plan at the end of December 2008 showed the plan held assets of about $2.9-billion. This means Ford could have paid out only about 62% of total liabilities if the plan were to have ended on that date.
Ford and the CAW have been in contract negotiations for the past two weeks, with the company looking for concessions similar to those the union gave General Motors Co. and Chrysler Group LLC this year to help preserve jobs for Canadian autoworkers.
The Ontario and federal governments have pitched in with some $13-billion in bailout cash to prop up the two companies.
Ford, which has avoided bankruptcy protection and has not asked for bailout money in Canada or the United States, is nonetheless looking for any opportunities for "cash conservation" to help improve its bottom line.
"In the absence of [funding relief ], Ford's contribution to the plan to fund the normal cost of the plan and all special payments is estimated to be $160.5-million a year over the first five years and $38.5-million over the next five years," the letter says.
Under the plan, Ford would save $5-million a year for the first five years, but would have to up its contributions to $44.8-million a year in the last five years.
Workers have until Sept. 25 to file a written objection with Ford.
erlam@nationalpost.com
© Copyright (c) National Post