GM cuts pensions: Rationale behind move

FILE - In this July 27, 2011 file photo, General Motors Chairman and CEO Dan Akerson listens at a news conference at the start of national contract negotiations at the General Motors Hamtramck Assembly plant in Hamtramck, Mich. After years of big discounts, GM is finally getting a good price for its cars and trucks, and it's helping the company's bottom line. (AP Photo/Paul Sancya, File)
Paul Sancya

A day before announcing a record annual profit of $7.6 billion in 2011, General Motors decided to end traditional pension plans for around 19,000 salaried workers hired before 2001 and transition those employees to a 401(k)-type plan based on worker contributions.

Workers hired after 2001 are already in the same plan, which does not provide guaranteed benefits, relying on employee contributions based on salary and bonuses.

GM records its highest profit ever: $7.6 billion
GM plans to freeze salaried workers' pensions

Rebecca Jarvis explained some of the automaker's rationale for the move, especially in light of its record profits, on "CBS This Morning" Thursday:

"There are still 500,000 workers who have now left General Motors who they are still paying pension plans to. That's a $9 billion shortfall that General Motors is facing. In a company that's making about $8 billion in profits, that's really hard to continue to pay out over time," she said.

Watch Jarvis' full analysis, including how GM's move may benefit taxpayers, in the video player above.