GM’s new strategy will shift pension liabilities to annuity

General Motors Co. will change the way it makes pension payments to white-collar retirees, shoring up its finances by offering buyouts and shifting liabilities to an annuity.

The moves will unload $26 billion in pension liabilities from the Detroit automaker’s books, and experts say the changes are likely the start of a trend as companies with defined benefit pension plans try to cut risk and administrative costs.

GM said Friday it will offer 42,000 retirees a lump-sum of cash if they agree to stop taking monthly benefits. For the rest of the 118,000 U.S. salaried retirees and spouses, GM will buy a group annuity that will make monthly payments starting in 2013.

The Prudential Insurance Co. will handle the annuity and pay the benefits. The amounts of the monthly pension payments will not change. GM’s current salaried workers also will get the same benefits that they would have received.

The moves will cut GM’s total U.S. salaried pension obligation from $36 billion to around $10 billion.

Gas prices drop below $3 in South Carolina, Virginia

There’s some good news behind the discouraging headlines on the economy: Gas is getting cheaper. At least two states — South Carolina and Virginia — had stations selling gas for $2.99 on Friday and it could fall below $3 in more areas over the weekend.

A plunge in oil prices has knocked more than 30 cents off the price of a gallon of gas in most parts of the U.S. since early April. The national average is now $3.61. Experts predict further drops in the next few weeks.

If Americans spend less filling their tanks, they’ll have more money for discretionary purchases. The downside? Lower oil and gas prices are symptoms of weakening economic conditions in the U.S. and around the globe.

On Friday, oil plunged nearly 4 percent as a bleak report on U.S. job growth heightened worries about a slowing global economy and waning oil demand. The unemployment rate rose to 8.2 percent from 8.1 percent. Sobering economic news from China and Europe also added to the drop.

West Texas Intermediate, the benchmark for oil in the U.S. fell $3.30, or 3.7 percent, to $83.23 per barrel, the lowest price since early October. The drop adds to a 17 percent decline in May. Brent crude, which is used to price international oil, lost $3.44, or 3.4 percent, to $98.43 per barrel, its lowest price since January 2011.

Anxious investors flocking to gold, government bonds

Nervous investors bought gold on Friday, as a dreary U.S. jobs report sank stock markets worldwide.

Investors needed a safer place for their money as the Dow Jones industrial average and S&P 500 index fell more than 2 percent. They piled into U.S. government bonds and gold. The yield on the 10-year Treasury note fell to a new record low, meaning the government is paying less than ever to persuade people to buy the bonds. Gold for August delivery jumped nearly 4 percent, or $57.90, to $1,622.10 per ounce.

Investors often buy gold when the stock market is falling and they’re anxious about the economy. As a precious metal, it’s more detached from the economy’s fundamentals.

— From news service reports