Protecting Pension Benefits: PBGC Meets General Motors (B)

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  • Product Description

    Abstract:
    In this case, the federal entity responsible for both safeguarding and insuring the private pension systems of the United States (Pension Benefit Guaranty Corporation) must deal with one of the nation's largest and arguably most troubled corporate pension systems--that of the General Motors Corporation. When GM proposes to sell off its Electronic Data Systems subsidiary, regulators at PBGC face a decision. Should they permit the deal to go forward if GM does not address an estimated $20 billion unfunded pension liability? In considering the question, PBGC must decide the extent, and potential justification, for demonstrating regulatory flexibility. Insisting on the letter of the law might scotch a deal which could lead to a significant contribution to GM's pension liability. Too great a leniency, however--for instance, by allowing the value of GM's own stock to be applied against pension liability--might jeopardize the interests of thousands of retired auto workers. The case is meant both to raise the issue of public sector negotiations flexibility and to facilitate discussion of the dynamics of public-private negotiations. See also Part B (1386.0).

  • Other Details

    Publication Date: January 01, 1997
    HKS Case Number: 1386.0
    Case Author: Esther Scott
    Faculty Lead: Linda Kaboolian and James Sebenius
    Pages (incl. exhibits): 12
    Setting: United States
    Language: English
    Funding Source: Council for Excellence in Government, Washington, DC
    _year: Older than 2000
    _pages: 1-15
    _geography: US & Canada
  • Warranty Information

    /review/1386.0.EducatorCopy.pdf

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