GM Europe Sale Under Threat Due To Vauxhall Pensions Deficit

Pensions Expert John Ralfe said the sale of General Motors’ European arm along with Vauxhall could face scrutiny because of its £1bn pension deficit. About 15,000 members of Vauxhall’s pension scheme could not receive their defined benefit plans as the pension scheme only has about £1.8bn but has to deal with £2.6bn worth of liabilities.

A 2014 end year report by Vauxhall revealed the figures showing an £840m deficit that possibly inflated to £1bn over the last three years. Despite the record low interest rates, the amount could bounce between £1bn and £1.2bn.

The French PSA Group are reported to have communicated with General Motors over acquiring its properties for Opel, its European arm. Ralfe said the pensions deficits could be “a major issue for the takeover” that could mean a halt in the dealings.

PSA had made it clear that General Motors had to clear its Vauxhall issue by itself before the French auto group acquired Opel. PSA expects General Motors to guarantee the handling of the pension issue.

Numerous corporations in the United Kingdom outside the automotive industry also face huge pensions deficit issues including steel maker Tata Steel and retail chain BHS. Both are under fire for the deficit while the companies are scrambling for options to provide for their employees’ defined benefit pension schemes.