Automaker reinstates 401(k) match for workers
GM's improved finances are good news for white-collar workers.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
Salaried workers at General Motors Corp. are regaining the company-paid match to their retirement savings accounts.
Starting Jan. 1, the automaker will offer its white-collar staff a match of 50 cents for every dollar contributed to a 401(k) account, up to 4 percent of the employee's salary, said Tom Wilkinson, a GM spokesman.
The match was suspended this past January as one of many cost-cutting moves enacted by GM.
"Toward the end of last year, there was a real rallying of the troops," Wilkinson said. "The financial numbers were not too good, and there was a need to look at everything."
GM's finances look better today, which is one reason the match is coming back, he said.
"This reflects the success of the turnaround," he said.
The other reason for the return of the match is that the company wants to remain attractive as it competes for new talent and tries to retain its current work force, he said.
GM is reinstating its 401(k) match at a higher amount than it had been when discontinued. During 2005, the company cut the match from 50 cents per dollar contributed to 20 cents.
Wilkinson said the amount has fluctuated over the years according to GM's financial health and had been as high as 80 cents in 2001.
He said the match had been invested directly into a GM stock fund, with employees being able to move the money to other investment options. Starting in January, however, the match will go directly into the investment mix that the workers have chosen.
Other cost-cutting moves
Other money-saving measures enacted by GM this year included having salaried workers pay more for health care and losing tuition reimbursement payments.
GM reported a net loss of 3.2 billion in the second quarter, but its massive buyout and early-retirement program alone cost the company 3.7 billion. When removing that figure and losses from the sale of controlling interest in GMAC, GM reported a profit of 1.2 billion, compared with a loss of 231 million in the same quarter a year earlier.
Meanwhile, Reuters reported this week that Credit Suisse revised its third-quarter earnings estimate for GM from a loss of 16 cents a share to a profit of 27 cents a share. It credited the change to GM's "pricing discipline" on vehicle sales.