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Big Three Automaker Retiree Pensions at Serious Risk

General Motors Corp. and Chrysler LLC retirees and employees could lose $23 billion in pension benefits if the companies terminate their retirement plans in bankruptcy, the government’s pension insurance agency warned Tuesday.

Neither GM nor Chrysler plans to file for bankruptcy, but both are taking steps to prepare in case they are forced to do so in the coming weeks. While neither has said it plans to terminate its pension program, struggling steel companies and airlines have used bankruptcy to get out from under large pension obligations and turn them over to the government.

GM and Chrysler combined provide pension benefits to about 630,000 retirees and dependents, and cover another 300,000 who haven’t begun drawing benefits.

The Obama auto task force has warned that GM’s future pension costs — which include $6 billion payments due in 2013 and 2014 — are “unsustainable.”

If either GM or Chrysler terminates its pension plan, it would be the largest assumed by the government, in terms of number of employees.

The PGBC was created by Congress in 1974 after the failure of the automaker Studebaker in 1963, which left 11,000 retirees with just 15 cents on the dollar on their pensions.