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Drew Dowdell

GM Adept at Fixing Pension Fund Problems

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GM Adept at Fixing Pension Fund Problems

Situation

1. GM's pension surplus increased by $9.6B in 2006

2. Went from $17.8B underfunded in 2002 to $17.1B overfunded in 2006

Significant Points

1. GM put $18.5B--mostly raised in bond issue--into pension funds in 2003

2. Got above-market returns on new money in strong investment market

3. GM locking in gains w/ switch to less volatile investment targets

4. Using surplus indirectly to help buy time for turnaround

5. Pension funds absorbed some costs from 34K early retirements in 2006

6. Will use more of surplus to pick up part of Delphi pension obligations

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Dont get me wrong, I love GM. But if they made cars as well as they managed portfolios they would not be in trouble. As things stand they should quit making cars and become investment bankers. Support the division that's making profits (investment banking) rather than the one making losses (manufacturing cars).

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Dont get me wrong, I love GM. But if they made cars as well as they managed portfolios they would not be in trouble. As things stand they should quit making cars and become investment bankers. Support the division that's making profits (investment banking) rather than the one making losses (manufacturing cars).

Keep your eye on the news, all of that is changing.

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Keep your eye on the news, all of that is changing.

Hopefully not ALL. I don't want their pension funds to make losses.
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