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Ford Lump Sum Pension Payment

Sigma Investment Counselors

May 2, 2012

This week, Ford Motor Co. announced they will be offering a voluntary lump-sum defined benefit pension plan payment to about 90,000 US salaried retirees and former employees.  Ford did not provide detail on the payout amounts or formula.  The plan will be rolled out in stages starting July 1 and they have already begun notifying eligible retirees.  We have a number of clients who this will impact.  Once the details are released, we plan to consult with our retired Ford clients regarding objectives, cash needs, life expectancy and other factors to determine on a case by case basis whether the lump sum option makes sense for them.  Watch our blog and Sigma Summaries newsletter for more information on how to evaluate your options, and as always do not hesitate to contact your portfolio manager with questions.

Please feel free to share this information with anyone who is eligible for this offer.
Ford said the following in their quarterly earnings release –

 

As part of the company’s long-term strategy to de-risk its global funded pension plans, Ford announced today that it will offer to about 90,000 eligible U.S. salaried retirees and U.S. salaried former employees the option to receive a voluntary lump-sum pension payment. If an individual elects to receive the lump sum payment, the company’s pension obligation to the individual will be settled. This is the first time a program of this type and magnitude has been offered by a U.S. company for ongoing pension plans. Payouts will start later this year and will be funded from existing pension plan assets. This is in addition to the lump-sum pension payout option available to U.S. salaried future retirees as of July 1, 2012. “Continuing to improve the underlying strength of our balance sheet remains a fundamental part of financing the One Ford plan,” said Bob Shanks, Ford executive vice president and chief financial officer. “Providing the option of a lump-sum payment to current salaried U.S. retirees and former employees will reduce our pension obligations and balance sheet volatility.”

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