GM Reallocates Assets to Protect Pension Funds

March 14, 2007 ( - In an effort to preserve the assets of its overfunded pension plans, General Motors Corp. (GM) announced it was reallocating 20% of those assets from stocks to bonds.

Reuters reports GM Chief Financial Officer Fritz Henderson said the shift is intended to reduce return volatility and the probability of future contribution requirements of the company. GM’s plans are overfunded by more than $17 billion.

Due to the reallocation, GM said the expected long-term annual return on its U.S. pension plans will be lowered from 9% to 8.5%, effective January 1, according to Reuters.

The asset allocation of the company’s pension plans will now be 52% to global bonds, 29% to global equity, 11% to alternative investments, and 8% to real estate.