General Motors 2010 Annual Report Download - page 222

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
to interest rates on long-term debt securities and foreign currency exchange rate fluctuations. The risk of default can be influenced by
various factors including macro-economic conditions, market liquidity, fiscal and monetary policies and counterparty-specific
characteristics and activities. Certain agreements with counterparties employ set-off, collateral support arrangements and other risk
mitigating procedures designed to reduce the net exposure to credit risk in the event of counterparty default. Credit policies and
processes are in place to manage concentrations of counterparty risk by seeking to undertake transactions with large well-capitalized
counterparties and by monitoring the creditworthiness of these counterparties.
Plan Funding Policy and Contributions
The funding policy for qualified defined benefit pension plans is to contribute annually not less than the minimum required by
applicable law and regulations or to directly pay benefit payments where appropriate. At December 31, 2010, all legal funding
requirements had been met.
The following table summarizes pension contributions to the defined benefit pension plans or direct payments to plan beneficiaries
(dollars in millions):
Successor Predecessor
Year Ended
December 31, 2010
July 10, 2009
Through
December 31, 2009
January 1, 2009
Through
July 9, 2009
Year Ended
December 31, 2008
U.S. hourly and salaried .............................. $4,000 $ — $ — $ —
Other U.S. ......................................... 95 31 57 90
Non-U.S. .......................................... 777 4,287 529 977
Total contributions ................................... $4,872 $4,318 $586 $1,067
Required Pension Funding Obligations
We do not have any required contributions due to our U.S. qualified plans in 2011. The next pension funding valuation to be
prepared based on the requirements of the Pension Protection Act (PPA) of 2006 will be as of October 1, 2010. Based on the PPA, we
have the option to select a funding interest rate for the valuation based on either the Full Yield Curve method or the 3-Segment
method, both of which are considered to be acceptable methods. A hypothetical funding valuation at December 31, 2010, using the
3-Segment rate at May 31, 2010 for the funding plan year beginning October 1, 2010 and assuming the December 31, 2010 Full Yield
Curve funding interest rate for all future funding valuations projects contributions of $2.3 billion, and $1.2 billion in 2015 and 2016.
Alternatively, a hypothetical funding valuation at December 31, 2010 using the 3-Segment rate at May 31, 2010 for the funding plan
year beginning October 1, 2010 and assuming the December 31, 2010 3-Segment interest rate for all future funding valuations
projects contributions of $0.3 billion in 2016. In both cases, we have assumed that the pension plans earn the expected return of 8.0%.
In addition to the discount rate and return on assets, the pension contributions could be affected by various other factors including the
effect of any legislative changes. We are evaluating whether we will make additional voluntary contributions in 2011.
In July 2009 $862 million was deposited into an escrow account pursuant to an agreement among Old GM, EDC and an escrow
agent. In July 2009 we subscribed for additional common shares in GMCL and paid the subscription price in cash. As required under
certain agreements among GMCL, EDC, and an escrow agent, $3.6 billion of the subscription price was deposited into an escrow
account to fund certain of GMCL’s pension plans and HCT obligations pending completion of certain preconditions. In September
2009 GMCL contributed $3.0 billion to the Canadian hourly defined benefit pension plan and $651 million to the Canadian salaried
defined benefit pension plan, of which $2.7 billion was funded from the escrow account. In accordance with the terms of the escrow
agreement, $903 million was released from the escrow account to us in September 2009. At December 31, 2010 $1.0 billion remained
in the escrow account.
220 General Motors Company 2010 Annual Report