Around 40,000 GM retirees facing big pension decision - New York News

Around 40,000 GM retirees facing big pension decision

Posted: Updated:
General Motors headquarters in Detroit  (Credit: WJBK | myFOXDetroit.com) General Motors headquarters in Detroit (Credit: WJBK | myFOXDetroit.com)
SOUTHFIELD, Mich. (WJBK) -

"It's probably a surprise. It was to me, very much a surprise when I got the letter," said GM retiree Bob Black.

He put 40 years into General Motors and now he has only a few weeks to figure out how to divvy up the retirement money owed to him.  Black is leaning towards a lump sum.  Why?

"Just some of the things I've read and I'm a little bit concerned about inflation, and by getting a lump sum, I'm in complete control of my finances."

It's a question 40,000 GM retirees are having to ask -- the lump sum or not.  General Motors took the pension accounts for these retirees and handed them over to Prudential.

"Everybody's just spending the next [several] weeks of their life trying to figure out the most important decision of their life," said Dean Thurmon with Investwise Financial.

He calls it a game of hot potato.

"They decided they didn't want it anymore, so they asked the government ... which means they basically asked themselves since the government is one of the largest shareholders of General Motors, for permission to dump this onto somebody else."

$500,000 is the average amount that a GM employee would get paid out if they went for the lump sum.  If not, they get a few thousand dollars every month.

"There was a catch-all for GM called the Pension Benefit Guarantee Corporation that [would] back up the pensions.  Prudential doesn't have that.  Prudential has the State of Michigan or your own local state that will somehow back up a portion of that pension," Thurmon explained.

250 retirees coming through the InvestWise office with not a lot of time to decide.  Thurmon says many retirees have been doing some fuzzy math.

"They're taking their $500,000 lump sum and dividing it by the $36,000 that they're going to receive per year from General Motors and saying, hey, GM is only expecting me to live another 13 years or something.  They're not considering any of the interest or growth or dividends ... that $500,000 would be earning for the rest of their life."

It's a hard lesson that guys like Black never imagined having to learn.

"I guess I should have paid better attention in economics class," he said.

GM retirees who are being offered this package have until July 20 to make up their minds.

  • Local NewsLocal NewsMore>>

  • Runners of 3,100-mile race in Queens seek spiritual experience

    Runners of 3,100-mile race in Queens seek spiritual experience

    Thursday, July 31 2014 7:26 PM EDT2014-07-31 23:26:44 GMT
    Since mid-June, 14 runners have been on a mission that is spiritual at its core. They are running the Self-Transcendence 3,100 Mile Race in Jamaica, Queens. Spiritual leader and former Queens resident Sri Chimnoy, who died in 2007, created the race, which lasts 52 days.
    Since mid-June, 14 runners have been on a mission that is spiritual at its core. They are running the Self-Transcendence 3,100 Mile Race in Jamaica, Queens. Spiritual leader and former Queens resident Sri Chimnoy, who died in 2007, created the race, which lasts 52 days.
  • New York's smallest piece of private land

    New York's smallest piece of private land

    Thursday, July 31 2014 7:13 PM EDT2014-07-31 23:13:43 GMT
    The Hess triangle is a tiny piece of private property in Greenwich Village. Manhattan historian Joyce Gold explained the origins of the property: After World War I, New York City seized a beautiful residence and tore it down so it could extend Seventh Avenue and the west side subway below it. The city left the building's owner only a tiny scrap of property so small it requested he donate the triangle to make way for a sidewalk. The man refused, took the city to court and won.
    The Hess triangle is a tiny piece of private property in Greenwich Village. Manhattan historian Joyce Gold explained the origins of the property: After World War I, New York City seized a beautiful residence and tore it down so it could extend Seventh Avenue and the west side subway below it. The city left the building's owner only a tiny scrap of property so small it requested he donate the triangle to make way for a sidewalk. The man refused, took the city to court and won.
  • Road-trip vacations that don't break the bank

    Road-trip vacations that don't break the bank

    Thursday, July 31 2014 5:37 PM EDT2014-07-31 21:37:29 GMT
    Last-minute vacations don't need to be a headache or ridiculously expensive, especially if you make it a road trip. Even if you don't have a car, renting one can be an affordable option.Lauren Lyons Cole, a personal finance contributor to TheStreet.com, has some suggestions.
    Last-minute vacations don't need to be a headache or ridiculously expensive, especially if you make it a road trip. Even if you don't have a car, renting one can be an affordable option.Lauren Lyons Cole, a personal finance contributor to TheStreet.com, has some suggestions.
  • Local NewsLocal NewsMore>>

  • Romulus cop in hot water after road rage incident

    Romulus cop in hot water after road rage incident

    Thursday, July 31 2014 8:03 PM EDT2014-08-01 00:03:03 GMT
    An off-duty Romulus police officer is facing felony charges in connection with a road rage incident. Officer David Brooks is facing felonious assault and felony firearms charges after an investigation by Van Buren Township detectives.
    An off-duty Romulus police officer is facing felony charges in connection with a road rage incident. Officer David Brooks is facing felonious assault and felony firearms charges after an investigation by Van Buren Township detectives.
  • Dearborn man bound for trial for fatal soccer referee punch

    Dearborn man bound for trial for fatal soccer referee punch

    Thursday, July 31 2014 7:53 PM EDT2014-07-31 23:53:32 GMT
    A Dearborn man will see a trial for second degree murder, accused of killing a soccer referee with one punch.Baseel Abdul-Amir Saad was bound over for trial in the death of John Bienewicz in 16th District Court today.Saad was ejected from an adult soccer game in Livonia -- when witnesses say he turned around and punched Bienewicz in the face June 29 .A Wayne County medical examiner testified that Bienewicz lost consciousness before he hit the ground.The defense said that it was a competitive ...
    A Dearborn man will see a trial for second degree murder, accused of killing a soccer referee with one punch.Baseel Abdul-Amir Saad was bound over for trial in the death of John Bienewicz in 16th District Court today.Saad was ejected from an adult soccer game in Livonia -- when witnesses say he turned around and punched Bienewicz in the face June 29 .A Wayne County medical examiner testified that Bienewicz lost consciousness before he hit the ground.The defense said that it was a competitive ...
  • Testimony: Renisha McBride pounded on homeowner's door before being fatally shot

    Testimony: Renisha McBride pounded on homeowner's door before being fatally shot

    Thursday, July 31 2014 7:47 PM EDT2014-07-31 23:47:47 GMT
    DETROIT (AP) -- A former medical examiner sparred with a prosecutor Thursday over a wound on the hand of a woman who was fatally shot on a Detroit-area porch, telling jurors it seems to fit the defense's claim that Renisha McBride was pounding on the homeowner's doors before she was killed.Dr. Werner Spitz, a forensic pathologist, said photos of McBride's body show a "small superficial laceration" on her left hand. It "could have come from pounding on something," Spitz said.The testimony was ...
    DETROIT (AP) -- A former medical examiner sparred with a prosecutor Thursday over a wound on the hand of a woman who was fatally shot on a Detroit-area porch, telling jurors it seems to fit the defense's claim that Renisha McBride was pounding on the homeowner's doors before she was killed.Dr. Werner Spitz, a forensic pathologist, said photos of McBride's body show a "small superficial laceration" on her left hand. It "could have come from pounding on something," Spitz said.The testimony was ...
Powered by WorldNow
Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices