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DETROIT (AP) — General Motors is changing the way it pays monthly benefits to white-collar retirees, and cutting its U.S. pension obligation by $26 billion.
The company says it will offer 42,000 retirees a lump-sum of cash to stop taking monthly benefits. The company will buy a group annuity for the rest of the salaried retirees, who will get their payments from Prudential Insurance Co. starting in 2013. The changes will affect a total of 118,000 white-collar retirees.
GM says it will make $3.5 billion to $4 billion in cash payments to its pension plans to buy the annuity. It expects the move to shrink earnings by $200 million a year because pension income will drop.
Shares of Detroit's General Motors Co. jumped 3 percent after the change was announced.