In a groundbreaking move to reduce Ford Motor's pensionobligations and related balance-sheet volatility, the company saidit will offer salaried retirees and former salaried employees lumpsums in lieu of future pension payments.

“This involves retirees in a plan that's not terminating,” saysMike Archer, leader of intellectual capital for the North Americanretirement practice of consultancy Towers Watson, pictured atright. “We're unaware of any other large plan that has done this.”Other organizations have offered lump sums to former employees whoare vested in the pension plan but not yet retired, he says.

Whittling down pension obligations will make it easier for Fordto manage them, Archer says. “The size of pension obligations thatthey have requires them to spend an awful lot of time managingthose obligations,” he says. “A strategy that helps Ford make theobligation smaller is one that long term will help them make thesuccess of the organization more fully dependent on how they do inthe core business than how they do in managing their pensionobligations.”