As General Motors tries to hammer out a deal to sell its long-struggling Europe business to PSA Group, how the companies will manage an underfunded pension plan for retirees remains to be sorted.
GM’s pension plan for Opel and Vauxhall retirees is underfunded by about $9 billion, according to Bloomberg News.
PSA would like GM to keep a big chunk of that responsibility, but the American car maker is likely to divest itself of any future liabilities for a European operation it would not control. PSA is willing to take on GM’s troubled business but would prefer to avoid responsibility for the retiree benefits once a deal is done.
GM doesn’t disclose the size of its European pension liabilities, the company said in a filing earlier this month that its non-U.S. pension plan had about $24 billion in obligations and was underfunded by about $11 billion as of the end of last year and analysts have calculated from this and other data that it leaves a liability of about $9 Billion in Europe including a £1 Billion in the Vauxhall scheme.
PSA CEO Carlos Tavares played down the threat to British plants as he discussed his potential takeover of General Motors’ European operations during a visit to London last week when he met Unite and Government Ministers.
Tavares has been on a charm offensive to reassure politicians and unions that any deal to buy the Opel/Vauxhall business would not lead to large-scale job losses.
Tavares met the Unite union’s General Secretary, Len McCluskey, on Friday and afterwards the Union leader said, “He talked in terms of not being here to shut plants. That’s not his nature.”