GM to Buy Out Pensions of 12,600 Retirees

General Motors Co. says that about one-third of its 42,000 eligible U.S. salaried retirees opted to take one-time cash payments in lieu of continuing to receive monthly pension benefits.

The buyouts will cost $2.6 billion, which will come out of the pension plan, according to the company. It will contribute an equal amount of cash to the fund to top it up.

GM also intends to complete a previously disclosed deal this month to roll the remaining U.S. salaried pension assets into an annuity from Prudential Insurance Co. of America. The insurer will distribute future pension payments.

GM says the pension buyouts and annuities will wipe a $29 billion liability off its balance sheet $3 billion more than the company originally predicted. GM expects to record a $2.9 billion pretax charge in the current quarter for the various pension transactions.