Allan Sloan
Allan Sloan - 
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SCOTT JAGOW: General Motors has problems aplenty, but one area where GM has succeeded lately is funding its worker pensions. Newsweek's Allan Sloan is here to explain what the automaker has done right.

ALLAN SLOAN: Near the end of 2003, they borrowed what was, I think, the biggest corporate bond issue in history, something like $13.5 billion, put all that money into the pension funds, and then the past few years pension returns have been great. You know, the stock markets have been strong all over the world, bond markets have been good, and they made far more money on their investments than they projected making. So they shipped something like $19 billion out of stocks into bonds and barring a complete meltdown somewhere, they won't have to put any money into their U.S. pension funds at least as long as I'm still around.

JAGOW: Even though GM is cutting thousands of jobs, those people can be rest assured that their pensions are OK?

SLOAN: Sure, in fact that was part of the deal, and the pension surplus that GM has would be even bigger if it had not been for those 34,000 people who took the buyout last year because one of the provisions of the buyout was a slightly better pension deal and the pension fund was up to paying for it. You can argue that the pension fund subsidized the rest of the company. GM had stepped up, put money into the pension fund when they could borrow cheap, and then they earned very well on it.

JAGOW: So Allan, what's the lesson here for other companies?

SLOAN: If you fund these things when you have access to money, which is what GM did in 2003, and you invest it well, you can get out from under the problem, especially if you do what GM is doing which is instead of taking the risk for another year on the stock market, it's taking a lot of money off the table, which is probably the hardest thing to do. The hardest thing to do usually is to sell your winners, but they've managed to do that. It's a shame the car business isn't as profitable as their pension business.

JAGOW: Allan Sloan, the Wall Street editor for Newsweek magazine.