General Motors announced Tuesday that beginning Jan. 1, 2007, it will put the freeze on its pension plans for its salaried employees, thereby reducing its pension liabilities by a total of $1.6 billion. The new plan does not, however, affect union workers.
Any salaried worker hired before Jan. 1, 2001, will continue to receive their vested defined benefits up to that date, but benefits between 2001 and 2007 will be capped at 1.25% of their average monthly base salary. For employees hired after Jan. 1, 2001, GM will contribute 4% of their annual salary to their 401(k) through 2007. Then, beginning Jan. 1, 2007, for all employees, GM will simply match 50% of contributions up to 4%.