DETROIT -

Rod Meloni - more 4 your money Post-bankruptcy General Motors is a new company, looking forward, not backward.

Why would it look backward, legally it doesn’t have to! It’s becoming apparent to GM white collar retirees that they are very much the part of what is getting left behind. General Motors Retirees Association President Jim Shepherd wrote to GM Chief Executive Dan Ackerson back in June protesting that fact. Ackerson decided the new GM needs to unload its $26 billion white collar pension obligation from its balance sheet. The Pension Benefit Guarantee Corporation, the federal government’s oversight agency over pensions, gave Ackerson the green light to do so.

His plan: Offer white collar retirees a choice: 1.) Take a lump sum payment for the amount your pension is currently worth [in many cases more than half a million dollars] or 2.) Take an immediate lifetime annuity managed by Prudential Insurance Company.

Shepherd called the plan “galling" claiming the new GM is hanging its retirees out to dry. He wrote: “never, even in our wildest imagination, could we ever have foreseen that GM would then turn around and treat its retirees with such little regard and with such disdain… once again, salaried retirees, those of us not protected by a labor agreement, are being singled out for disparate treatment." Translation: because we are non-union we are getting the shaft! You can easily understand why he is angry that 48,000 retirees, a crowd larger than the best ever attended single Detroit Tigers Game at Comerica Park, would have to bear this burden. Yet, there is little to nothing Shepherd can do to change Ackerson’s mind.

The deadline to make this vital decision is Friday July 20th. If you decide to take the lump sum you need to contact GM by that date to arrange for the lump sum payment. If you don’t decide, you are still making a decision. No contact with GM in regard to this pension decision means you will automatically get the Prudential annuity. An annuity is an equal monthly payment that lasts until the day you die. If you are married it is important you take the annuity with the spousal benefit; meaning your spouse will continue to get payments after your death [if that is the choice you would like to make]. This is no fun. Without your asking, GM white collar retirees are being forced to assess something few of us like to think about: life expectancy.

If your parents lived past 100 and you are in similarly good health it’s likely you will want the annuity. If you aren’t, then the lump sum may be the better way to go. But there are one thousand different considerations depending on your individual situation and there are no simple, easy thumbnails you can go to for good answers. If you have a gambling problem, or especially needy children you may not want to get involved with taking the lump sum. If you, in your retirement, have become market savvy and think you can get a good return for yourself in the markets then maybe the lump sum is the right answer for you. You get the idea there are no simple answers here.

It’s important to remember annuities are not “retirement” products so much as insurance products. Prudential is a Life Insurance Company that also sells annuities. Annuities are not backed by any government programs as a result. The PBGC was the government backing behind GM’s pension. The health of Prudential now becomes a major concern. If Prudential were somehow to go fins-up-in-the-tank all the annuity recipients are out of luck and out of money. There is nothing to give anyone reason to believe Prudential will do anything but flourish, but then again who really believed GM would be in bankruptcy a decade ago? There is also the question of whether you want to leave any money to your family after you die. With an annuity, there is no money left after your death [or your spouse’s if it’s a spousal annuity] whereas with a lump sum you can leave money behind. Lump sums can be dangerous too. Poor investment choices could leave you broke before you die.

So what to do? The first thing you should do is look for a Certified Financial Planner who will spend time with you to crunch the numbers that will help you make your decision. Yes, talk about this with your spouse and your friends and bowling buddies, but please… never just pull the lever on this decision without speaking with a qualified professional. Also, do not just let your decision go without looking at the numbers assuming the annuity is the best answer for you. You NEED to spend some time with this issue in the 48 hours remaining. As Tim Wyman CFP® JD, who has worked with dozens of GM retirees on this issue, told me, “There are a few financial decisions in our lives we need to get right and this is one of them quite frankly.” He is absolutely right. Do yourself a favor if you are one of these retirees. Drop what you are doing and get to work on your future right now if you haven’t already.