Detroit -- General Motors Corp. will temporarily suspend contributions to its 401(k) savings plan for salaried employees and pare severance benefits as it prepares for more white-collar job cuts in the coming year.
The changes in the white-collar compensation plans were spelled out in an information packet distributed Wednesday to GM's 36,000 U.S. salaried employees, a copy of which was obtained by The Detroit News.
The cutbacks are the latest efforts by the struggling automaker to rein in costs and another sign that GM can no longer afford the top-flight benefits its employees have enjoyed for decades.
"It's really belt-tightening time right now," said Bruce Belzowski, industry analyst with the University of Michigan's Office for the Study of Automotive Transportation.
The white-collar benefit cutbacks could help the automaker continue whittling its costs. The document distributed to employees said GM will cease contributing 20 cents for each $1 that employees put into the company's Savings-Stock Purchase Program as of Jan. 1, but will "monitor the business outlook in determining the appropriate time to reinstate GM's matching contribution."
The move comes after GM reduced its 401(k) match in April from 50 cents on the dollar to 20 cents. GM has provided matching funds for up to 6 percent of an employee's salary.
Word of the cuts at GM came a day after Ford Motor Co. announced a sweeping reduction of benefits for salaried workers, which were detailed in an internal memo.
Other changes in GM's white-collar compensation include removing a requirement that a portion of its 401(k) matching contributions be invested in GM common stock, which has plunged in value in recent weeks.
The company also told employees that its white-collar severance packages will be changed to limit payouts to one month of base salary for each year of service, with a maximum of 15 months.
In October, GM and the United Auto Workers agreed to a health-care plan that instituted the first monthly premiums for hourly retirees and required active UAW members to forsake a $1-an-hour pay increase next year. After the UAW deal, GM told its salaried employees that their monthly health-care premiums will nearly double in 2006, and that annual deductibles and out-of-pocket expenses for medical costs also will increase.
The benefits cuts come as GM is trying to reverse its slide in U.S. vehicle market share and proceed with a dramatic restructuring plan to shed 30,000 manufacturing jobs by 2008.
The company is also expected to cut more white-collar jobs next year, all of which will be subject to the revised severance program.
Since 2000, GM has cut its salaried work force by 32 percent, to 36,000. By the end of next year, GM Chairman Rick Wagoner said, the reduction will reach 40 percent, or another 2,500 jobs.