General Motors Co.’s deal to cut pension obligations by $26 billion and shift plans to Prudential Financial Inc. is poised to fuel more transfers as U.S. firms face a retirement-funding shortfall the size of Greece’s debt.
MetLife Inc. and Prudential are among insurers that expect the GM deal to encourage more corporations to offload plans. Pension liabilities exceed assets by more than $435 billion, according to a Bloomberg review of data disclosed by firms in the Russell 1000 Index of large U.S. companies. Greece, facing demands for austerity measures in exchange for rescue funds, had total debt of about $450 billion at the end of 2011.
The employers most likely to transfer obligations have high cash levels and “meaningful” underfunded retirement obligations, said Stephen Brown, an analyst at Fitch Ratings.
“We’ve looked at all sorts of options,” Shanks said in an interview. “It’s not like it’s rocket science. There’s only so many things you can do to de-risk a pension plan.”