Even during a financial downturn it may be possible for companies to continue to provide workers traditional pensions. General Motors, a company that recently asked for taxpayer funds, appears to have enough money in the pension fund to pay its more than 400,000 retirees their promised benefits for many years.
"G.M. says it will be paying retirees about $7 billion a year for the next 10 years," the New York Times reports. "The fund's assets were worth $104 billion at the end of 2007, more than enough to cover its obligations of $85 billion."
To produce adequate investment returns while also preserving the pension fund's surplus, only 26 percent of G.M.'s pension fund is invested in stocks — well below the typical pension fund’s allocation.
Health care for retirees is another story. The Times reports: “The total cost of these benefits in today’s dollars was estimated at $60 billion at the end of 2007, and G.M. had set aside only about $16 billion to cover the cost.”