Ford to Offer Lump-Sum Pension Payouts to Ex-Workers

By Jerry Geisel

Apr. 27, 2012

Ford Motor Co. said April 27 it will offer 90,000 U.S. salaried retirees and former employees the option to take their monthly pension benefit as a lump-sum payment.

The magnitude of the program, which is part of Ford’s long-term strategy to “de-risk” its pension plan, is the largest ever offered “by a U.S. company for ongoing pension plans,” the automaker said.

Pension experts say the program may be the first of its kind. Typically, lump-sum payments are offered as an option only when an employee terminates employment and is eligible for a pension benefit.

“Historically, lump sum distributions, which allow plan participants to exchange receiving periodic annuity payments for a single lump-sum payout, have been offered to participants only upon separation from active employment,” benefit consultant Towers Watson said in a statement.

When individuals take a lump-sum payment rather than continued monthly benefits, Ford no longer will face such risks as paying more than expected if the individuals live longer than expected. In addition, Ford no longer would face the risk of making additional unexpected contributions to its plans in the future to pay benefits if investment returns slump.

“Providing the option of a lump-sum payment to current salaried U.S. retirees and former employees will reduce our pension obligations and balance sheet volatility,” Ford Executive vice president and Chief Financial Officer Bob Shanks said in a statement.

At year-end 2011, Ford’s U.S. pension plans—including plans covering salaried and retired employees and union employees and retirees—had a funded ratio of 80.7 percent, with $39.41 billion in assets and $48.82 billion in liabilities. That compares with a funded ratio of 85.8 percent at year-end 2010, when the U.S. plans had $39.96 billion in assets and $46.65 in billion in liabilities.

Ford said payouts will start later this year and will be funded from existing pension plan assets. 

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email


Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.


Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management.


blog workforce

We build robust scheduling & attendance software for businesses with 500+ frontline workers. With custom BI reporting and demand-driven scheduling, we help our customers reduce labor spend and increase profitability across their business. It's as simple as that.

Book a call
See the software

Related Articles

workforce blog


EEOC says that employers legally can offer incentives to employees to get vaccinated in almost all instances

If you’re an employer looking to get as many of your employees vaccinated as possible, you can rest eas...

ADA, CDC, COVID-19, EEOC, GINA, pandemic, vaccinated

workforce blog


Fixing some common misconceptions about HIPAA

Ever since the CDC amended its COVID-19 guidance to say that the fully vaccinated no longer need to wea...

COVID-19, health care, HIPAA, human resources, wellness

workforce blog


We are in the midst of a public mental health crisis; how employers can help

Do not ignore these issues or your employees who are living with them. Mental health illnesses are no d...

ADA, benefits, Coronavirus, FMLA, mental health, paid time off