Ford Rejected Offloading Pension

Automaker decided to invest in global expansion, new models instead, CFO says.

Ford Motor Co., which has a $15.4 billion unfunded pension liability, rejected offloading its retiree obligations as General Motors Co. is doing in favor of investing on global expansion, new models and paying dividends.

The second-largest U.S. automaker considered shifting its salaried pension plan to an outside company as GM is doing by purchasing an annuity with a Prudential Financial Inc. unit, Bob Shanks, Ford’s chief financial officer, said yesterday. GM said it will spend $3.5 billion to $4.5 billion to purchase the group annuity and offer pension buyouts to 42,000 salaried retirees.

‘Very Personal’

Ford is contributing $3.5 billion to its global pension plans this year and will begin making buyout offers to salaried retirees in August, Shanks said. GM’s move to also offer lump-sum payments to retirees isn’t likely to have any impact on the take-rate at Ford, Shanks said.

Ford’s Investments

Ford has earmarked “quite a substantial amount” to fully fund its pension plans by mid-decade, Shanks said.

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