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>>

  • Deep split in Port Authority over unfinished WTC tower

    Deep split in Port Authority over unfinished WTC tower

    Wednesday, April 23 2014 9:03 PM EDT2014-04-24 01:03:40 GMT
    Board members of the Port Authority of New York and New Jersey revealed a deep split Wednesday over the agency's role in effecting the completion of the long-delayed 3 World Trade Center project, with some commissioners lauding the effort and others expressing grave concerns. The discussion at the monthly board meeting offered a rare glimpse into the negotiations that have been going on behind the scenes in recent months.
    Board members of the Port Authority of New York and New Jersey revealed a deep split Wednesday over the agency's role in effecting the completion of the long-delayed 3 World Trade Center project, with some commissioners lauding the effort and others expressing grave concerns. The discussion at the monthly board meeting offered a rare glimpse into the negotiations that have been going on behind the scenes in recent months.
  • God's Love We Deliver virtual bake sale for birthday cakes

    God's Love We Deliver virtual bake sale for birthday cakes

    Wednesday, April 23 2014 6:36 PM EDT2014-04-23 22:36:46 GMT
    God's Love We Deliver provides meals to people in the New York City area who are too sick to shop and cook for themselves. Clients also receive birthday cards that are decorated by local school students. Sometimes a cake is the only birthday gift that God's Love's clients will receive.
    God's Love We Deliver provides meals to people in the New York City area who are too sick to shop and cook for themselves. Clients also receive birthday cards that are decorated by local school students. Sometimes a cake is the only birthday gift that God's Love's clients will receive.
  • Success Academy students waiting for word on new locations

    Success Academy students waiting for word on new locations

    Wednesday, April 23 2014 5:58 PM EDT2014-04-23 21:58:48 GMT
    The mayor's office is saying one thing. The charter schools another. It is a lot of he said, she said. The bottom line is that right now the future of three charter schools is still unclear. Jennifer Duran is afraid because she doesn't know where her two children are going to school next year. Both kids attend success academy Harlem 4, one of three charter schools that still does not have a set location. The other two charters are Success Academy Jamaica in Queens and Success Academy City Hall.
    The mayor's office is saying one thing. The charter schools another. It is a lot of he said, she said. The bottom line is that right now the future of three charter schools is still unclear. Jennifer Duran is afraid because she doesn't know where her two children are going to school next year. Both kids attend success academy Harlem 4, one of three charter schools that still does not have a set location. The other two charters are Success Academy Jamaica in Queens and Success Academy City Hall.
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