GM to beef up pension assets by $10 million.

General Motors said it would contribute $10 billion to its largest pension fund, which was underfunded by $22.3 billion. The contribution is four times the company's 1993 earnings of $2.5 billion.

The company's decision came as the Clinton administration was asking Congress to take action on underfunding of the country's pension programs. The American Institute of CPAs has urged Congress to eliminate pension law provisions that discourage companies from funding their plans fully (see "AICPA Testifies at Hearings on Pension Benefit Protection," JofA, July94, page 9). According to the U.S. Labor Department, U.S. corporations' unfunded pension liabilities almost doubled between 1987 and 1992, rising from $27 billion to $53 billion. An estimated 8 million workers are covered by underfunded pension plans.

General Motors said it would contribute $6 billion in stock from its Electronic Data Systems subsidiary and $2 billion in cash in 1994 and as much in 1995.

Benjamin Newhausen, CPA, a partner with Arthur Andersen & Co.'s accounting principles group, said GM's contribution, along with a billion-dollar contribution by Chrysler to its pension fund, suggested publicly held companies recognized investors' concerns that underfunded plans threatened their financial strength. "Companies see an important connection between pension funds and the securities market," he said. "They believe investors will place a lower value on companies with significantly underfunded pension obligations."