Ford's Pension Liability Shrinks

Autoparts Report, Dec 19, 2002

Ford Motor Co. said that underfunding of its U.S. pension plan had narrowed by about $1 billion thanks to the improvement in world equity markets over the past month. "In the U.S., at the end of October, we were underfunded by something in the order of $6 billion," said Ford Vice President and Treasurer Malcolm Macdonald, who spoke in a meeting with institutional investors in Geneva.

"Since then, with the recovery in markets, that underfunding has diminished, I don't know the latest numbers, but my guess is it's by over a billion dollars," he said.

"The big issue about the pension fund, and the issue that I personally take some comfort from, is this is a long-term obligation," he added. Macdonald said the world's second-largest automaker still plans to contribute about $500 million to its pension plan over each of the next two years.

Macdonald said it was likely that Ford would take "a modest charge to profits" next year because of its pension liabilities but he did not elaborate.