GM needs to reduce its pension liability. In a PEU-like move, GM announced in June it would offer employees a lump sum buyout. The move is expected to reduce GM's pension obligations by $26 billion. The company will effectively contract out its pension function. It will pay Prudential for a group annuity contract for employees not taking the buyout.
GM will shift $29 billion of $109 billion in pension assets to Prudential. Did Prudential hold their nose on taking GM's PEU holdings? Or is this simply a re-balancing in the remaining portfolio after a major move? Only the people not talking know for sure.
GM loved PEU's for a decade and a half. They hired one to be their CEO. GM is but the latest middleman in moving PEU stakes. It's China's backdoor gain of U.S. assets. Will it garner a CFIUS review under Tim Geithner's Treasury? It's a global PEU world.
