DETROIT -- Ford announced today, along with its earnings, to offer a lump sum to its 90,000 salaried retirees as well as U.S. salaried former employees' due pensions to get them to voluntarily give up all rights to monthly payments.
The company called its program a first of its type and scope by a major U.S. company.
Ford did not provide details on the payout amounts or formula, which will be based on former salary years of service, and said it would be a one-time offer. It said the plan would be rolled out in stages starting July 1 and that it has already begun notifying eligible retirees.
In the announcement, Ford said the offer was part of a long-term strategy to "de-risk its global funded pension plans." It said that if an employee takes the lump sum offer, Ford's pension obligation to them is settled. It said the money for the lump sums would be taken from its existing pension plan assets, not operating cash.
"Continuing to improve the underlying strength of our balance sheet remains a fundamental part of financing the One Ford plan," said Bob Shanks, Ford CFO, in a statement. "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."
Shanks was blunter in comments to the Associated Press about freeing Ford from risk on pensions: "There's no exposure to the volatility of the obligations. They're just gone. They're just not anything we have to deal with."
Ford had global pension liabilities of about $74 billion at the end of 2011, and the company's pension plan was underfunded by $15.4 billion.
The plan does not affect union employees, whose pension obligations are covered by contract.