(Reuters) - Ford Motor Co’s Canadian subsidiary faces a $1.8 billion shortfall in its pension plan, the Globe and Mail said, citing a company letter to employees and retirees.
The pension plan held assets of $2.91 billion as of December 31, covering about 62 percent of the liabilities if it were wound up, the paper cited the letter as saying.
Ford is looking to take advantage of a change in Ontario law that extends the period for addressing pension shortfalls to 10 years from five, but can only do so with the approval of two-thirds of employees and retirees, according to the paper.
“Prudent management of Ford’s pension plans is important to the future success of Ford in Canada, and cash conservation is more important than ever,” the paper quoted the company as saying in the letter.
The company wants the Canadian Auto Workers union to provide it with pension relief similar to that it gave to the Canadian units of General Motors Co and Chrysler Group LLC, according to the paper.
The CAW agreed to significant concessions at Chrysler and General Motors earlier this year to help those companies qualify for billions in government aid.
“It’s important to note that Ford of Canada’s pension plans are funded in compliance with the Ontario Pension Benefits Act,” the paper quoted Ford spokeswoman Lauren More as saying on Tuesday.
The Globe added that Ford was unlikely to wind up the plan.
Reuters could not immediately reach Ford for comment.
Reporting by Ajay Kamalakaran in Bangalore; Editing by Lisa Von Ahn