General Motors (GM) has amassed quite a stash of cash since taking the historic multi-billion-dollar bailout package it received from the federal government in 2009 to avoid bankruptcy. On Friday, it announced that it would use the money to help reduce its U.S. pension obligations by $26 billion. The news was welcomed by investors because it was a step in the right direction in dealing with the risks of the enormous obligations.

Specifically, the plan calls for about 42,000 salaried retirees and surviving beneficiaries to be eligible to receive a voluntary single lump-sum payment. In return, these retirees must agree to stop accepting monthly payments. GM will purchase a group annuity contract from Prudential Insurance Co., under which Prudential will pay and administer future benefit payments to most of the U.S. company’s salaried retirees. The number of these retirees is about 118,000.

The transactions are expected to be completed by the end of the year, following completion of regulatory review, according to GM. Prudential will then assume responsibility for the benefits covered by the agreement and begin making the benefit payments in January 2013, the company added. There will be no change to the benefits to active employees.

GM also is creating a pension plan that it will fund that will cover salaried employees and some retirees that are not part of the 118,000 affected by the pension overhaul announced Friday. The amounts of the monthly pension payments will not change. GM’s current salaried workers also will get the same benefits they would have received before the move.To continue reading, click here.