Ford wants retirees out of pension plan, plans pension buyout
Ford retirees may face decision to take lump sum as auto company attempts pension buyout
DEARBORN, Mich. – Ford Motor Company is dangling a financial carrot in front of 90,000 retirees to coax them out of the company's pension plan.
Retirees would be offered the chance to take a lump-sum payment, which is typically worth several hundred thousand dollars, in exchange for stopping their monthly pension checks. Ford considers it the largest pension buyout offer ever made.
The program applies mostly to salaried retirees. Retired hourly workers are not affected.
Bob Pazdzierz worked as an engineer for Ford's overseas operations for 37 years. He's been retired since 2005, and finds the offer intriguing.
"My life expectancy I figure will be another 10-15 years. The lump sum may be enough. I'll consider it. I would be playing the odds," he said.
Tom Hakim, of Hakim Financial in Macomb County, says the one-time payment would give former employees more flexibility.
"I can give myself more money at times and take a little less if I don't need it," he said.
However, Hakim cautions that people should take the lump sum only if they are disciplined about their money.
"How many people who take this pension have a history of managing a large sum of money through their lifetime? Probably not many," he said.
Ford now has $74 billion in global pension liabilities. The pension is underfunded by $15 billion. Hakim expects many more companies to follow Ford's lead.
Ford expects to begin making the offers to random groups of employees starting later this year. It may take 12 months or so before all 90,000 retirees are contacted.
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