DEARBORN - As part of the company’s long-term strategy to de-risk its global funded pension plans, Ford is announcing today that it will offer to about 90,000 eligible U.S. retirees, former employees and surviving beneficiaries the option to receive a one-time voluntary lump-sum pension payment.
This voluntary opportunity allows salaried (primarily) retirees and surviving beneficiaries to take the remaining value of their General Retirement Plan (GRP) benefit as a single payment instead of continuing monthly payments. This is intended to be a one-time-only offer that may also include additional monthly pension benefit payment options. At this time, the lump sum pension payment opportunity is only available under the GRP. Other Ford-sponsored pension plans are not included, i.e., UAW Retirement Plan, UAW Personal Retirement Plan.
This is the first time a program of this type and magnitude has been offered by a U.S. company.
Payouts will start later this year and will be funded from existing pension plan assets. This is in addition to the lump-sum pension payout option available to future retirees as of July 1, 2012.
“Continuing to improve the underlying strength of our balance sheet remains a fundamental part of financing the One Ford plan,” said Bob Shanks, Ford executive vice president and chief financial officer. “Providing the option of a lump-sum payment to eligible U.S. retirees and former employees benefits the company because it will reduce our pension obligations and balance sheet volatility.”
Given the large number of eligible individuals, a series of election periods will be held throughout 2012 and 2013. Retirees and surviving beneficiaries will be assigned a specific election period based on a random process using the last two digits of the retiree’s Social Security number. No action is required at this time by retirees or surviving beneficiaries.
Eligible retirees and surviving beneficiaries will receive an announcement letter during the week of April 30, 2012 and additional information will be available prior to the start of their assigned election period.
Below is a brief Q&A on this voluntary lump-sum pension payment opportunity.
1. Why is Ford offering the lump-sum payment option?
This lump sum pension payment option offers benefits for both the eligible GRP participant and Ford. For the eligible participant, it allows the additional choice and flexibility in how they receive, invest and manage their GRP retirement funds. For Ford, it allows the company to reduce financial volatility and administrative costs related to pensions.
2. If I am in one of the later election periods, is there any risk of Ford running out of money for lump-sum payments?
Ford has carefully evaluated and planned for this opportunity to ensure there are adequate funds available for those who wish to receive a lump sum payment.
3. After paying out lump sums, will there still be enough money in the Pension Plan to provide benefits for present and future retirees?
Ford carefully monitors and manages pension plan funding. The company has carefully planned the lump sum opportunity to account for proper funding of the GRP going forward.
4. Is there anything I need to do right now?
No immediate action is required.
Once you are notified of the amount of your lump-sum in your Election Kit, you will want to consider how taking the lump sum payment option would fit with your retirement financial plan.
The materials you receive leading up to your election period will help you think through your decision. This is an important decision, and you are encouraged to consult with a financial planner and/or tax advisor. Your Election Kit will outline the details of what you need to do to make an election and will specify the amount of time you have to make a decision.
5. What if I have additional questions about the one-time, voluntary lump sum payment option ― who can I call for help?
A dedicated Pension Lump Sum Information Center will be available to answer your questions during your specific election period. Contact information will be provided in the Election Kit that will be sent to your address of record. Because of the large volume of eligible participants, access to the Pension Lump Sum Information Center cannot be provided to everyone at the same time. Pension Specialists will be available to answer your questions only during your election period. This will help ensure the highest quality service for those who are in the process of making their decision. The Pension Lump Sum Information Center will open at the time of the first election period; therefore, we cannot provide you with a phone number to call right now.
Please wait for your materials to arrive in the mail, read them carefully, and then call the Pension Lump Sum Information Center if you have questions or need additional help during your election period.
Benefits are governed by the terms of the applicable official plan document or policy. Summaries of benefits are available; however, if a conflict exists between any summary and the official plan document, the official plan document prevails. The policies, plans and programs described in this communication are not contracts and do not alter any at will relationship the Company has with its employees. The Company may modify or terminate these policies, plans and programs at any time.