General Motors Corp. has reportedly told its white-collar workers that it will suspend making matching contributions to their 401(k) retirement savings accounts and will reduce the severance benefits it pays.
The world’s biggest automaker is under pressure to cut costs as it lost $1.6 billion in the third quarter, and has seen erosion in its U.S. market share to Asian-based automakers.
GM distributed an information packet Wednesday on the benefit changes for its 36,000 U.S. salaried employees, The Detroit News said in Thursday’s editions.
The newspaper said GM told the employees that it would stop contributing 20 cents for each $1 that employees put into the company’s 401(k) program, starting Jan. 1.
“Based on current business conditions ... the GM matching contribution ... will be temporarily suspended,” the newspaper said, citing the document. “We will continue to monitor the business outlook in determining the appropriate time to reinstate GM’s matching contribution.”
In April, GM cut its 401(k) match from 50 cents on the dollar to 20 cents. The match covered contributions of up to 6 percent of salary.
GM said white-collar workers no longer must put part of the company-supplied portion of their 401(k) accounts in GM common stock, which has been losing value.
The company also said that white-collar severance packages will limit payments to one month’s base salary for each year of work up to 15 months.