http://finance.yahoo.com/tech-ticker/this-is-progress-gm-loses-4.3b-needs-12.3b-to-fund-its-pension-462788.html?tickers=gm,f,tm,hmc,%5Edji,%5Egspc,TBT
General Motors is out of bankruptcy but the troubled car giant still can't turn a profit. The company lost $4.3 billion in its first six months since emerging from bankruptcy. GM Chief Financial Officer Christopher P. Liddell is confident the road ahead will be smoother, saying "there's a chance of achieving profitability in 2010."
Let's hope so. The U.S. government owns 61% of the company.
GM is also struggling with its pension obligations; a large portion of GM's loss was due to a settlement with the United Workers Automobile Workers union over retiree health care liabilities.
According to a report by the Government Accountability Office, GM will need to add $12.3 billion into its pension fund by 2014. If GM and Chrysler (which is in the hole $2.6 billion) terminate their pensions, the Pension Benefit Guaranty Corporation – funded by, you know who - would then become responsible for as much as $14.5 billion in unfunded liabilities. However, if GM starts making money the company will be able to pay into the pension, the GAO reports.
Underfunded pensions are a widespread problem, not just for the private sector, as Henry and Aaron discuss in the accompanying clip.
