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>> Josephine Dries: Hello everyone, today we are here with Leon Labrecque,
one of the nation's experts on the Ford retiree and the Ford lump sum.
So Leon, why is Ford offering their retirees the Ford buyout lump sum, and what considerations
should Ford retirees take when considering this lump sum?
>> Leon Labrecque: Great question, we're going to be on for a long time I think [laughter].
Let's start out with why Ford's doing this. Ford is doing this to cleanup their balance
sheet. Because of accounting rules, Ford has to apply pension liabilities to their balance
sheet. So the liability on the pension plan shows up as a liability to Ford Motor Company.
Ford is underfunded by about, depending on how you look at it, between 9 and 11 billion
dollars. By offering the retirees a lump sum, Ford reduces their liabilities on the balance
sheet while never using a company asset. It's kind of brilliant, actually. So they give
the opportunities to the retirees to take the money out of the plan, and at the same
time, take the liability off their books. Now, not every retiree should take the lump
sum, so only some should take it, who knows how many will take it. So we'll see from a
different standpoint how the retirees should make the consideration.