Around 40,000 GM retirees facing big pension decision - Dallas News | myFOXdfw.com

Around 40,000 GM retirees facing big pension decision

Posted: Updated:
General Motors headquarters in Detroit  (Credit: WJBK | myFOXDetroit.com) General Motors headquarters in Detroit (Credit: WJBK | myFOXDetroit.com)
SOUTHFIELD, Mich. (WJBK) -

"It's probably a surprise. It was to me, very much a surprise when I got the letter," said GM retiree Bob Black.

He put 40 years into General Motors and now he has only a few weeks to figure out how to divvy up the retirement money owed to him.  Black is leaning towards a lump sum.  Why?

"Just some of the things I've read and I'm a little bit concerned about inflation, and by getting a lump sum, I'm in complete control of my finances."

It's a question 40,000 GM retirees are having to ask -- the lump sum or not.  General Motors took the pension accounts for these retirees and handed them over to Prudential.

"Everybody's just spending the next [several] weeks of their life trying to figure out the most important decision of their life," said Dean Thurmon with Investwise Financial.

He calls it a game of hot potato.

"They decided they didn't want it anymore, so they asked the government ... which means they basically asked themselves since the government is one of the largest shareholders of General Motors, for permission to dump this onto somebody else."

$500,000 is the average amount that a GM employee would get paid out if they went for the lump sum.  If not, they get a few thousand dollars every month.

"There was a catch-all for GM called the Pension Benefit Guarantee Corporation that [would] back up the pensions.  Prudential doesn't have that.  Prudential has the State of Michigan or your own local state that will somehow back up a portion of that pension," Thurmon explained.

250 retirees coming through the InvestWise office with not a lot of time to decide.  Thurmon says many retirees have been doing some fuzzy math.

"They're taking their $500,000 lump sum and dividing it by the $36,000 that they're going to receive per year from General Motors and saying, hey, GM is only expecting me to live another 13 years or something.  They're not considering any of the interest or growth or dividends ... that $500,000 would be earning for the rest of their life."

It's a hard lesson that guys like Black never imagined having to learn.

"I guess I should have paid better attention in economics class," he said.

GM retirees who are being offered this package have until July 20 to make up their minds.

  • Local NewsLocal NewsMore>>

  • Migrant teens from Central America to be housed in Farmington Hills

    Migrant teens from Central America to be housed in Farmington Hills

    Friday, August 1 2014 12:10 AM EDT2014-08-01 04:10:56 GMT
    Illegal immigrant teens from Central America to be housed in Farmington HillsTwenty-four illegal immigrant teens from Central America will soon be housed at Wellspring Lutheran Services in Farmington Hills, which has secured a federal contract. The immigration issue is a major one, and what seemed far, far away is now coming closer and closer to home."We've been watching this for six, eight weeks now, now it's Michigan," said William Largent, president and CEO of Meskwaki. the business arm of...
    Illegal immigrant teens from Central America to be housed in Farmington HillsTwenty-four illegal immigrant teens from Central America will soon be housed at Wellspring Lutheran Services in Farmington Hills, which has secured a federal contract. The immigration issue is a major one, and what seemed far, far away is now coming closer and closer to home."We've been watching this for six, eight weeks now, now it's Michigan," said William Largent, president and CEO of Meskwaki. the business arm of...
  • VIDEO: Witness says man roughed up by Clinton Township police, hospital security

    VIDEO: Witness says man roughed up by Clinton Township police, hospital security

    Thursday, July 31 2014 11:25 PM EDT2014-08-01 03:25:38 GMT
    In a video spreading across social media, a Michigan man says police and hospital security roughed up a man.
    In a video spreading across social media, a Michigan man says police and hospital security roughed up a man.
  • Large two truck crash closes I-75, second accident nearby

    Large two truck crash closes I-75, second accident nearby

    Thursday, July 31 2014 10:57 PM EDT2014-08-01 02:57:29 GMT
    A crash involving two semi trucks shut down I-75 tonight, according to Michigan State Police.
    A crash involving two semi trucks shut down I-75 tonight, according to Michigan State Police.
Powered by WorldNow

KDFW FOX 4
400 N. Griffin Street
Dallas, Texas 75202

Main Station Directory:
(214) 720-4444
News Fax:
(214) 720-3263 or (214) 720-3333

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices