GM Health Care Trust Finalized, says CAW President
November 8, 2011, 1:55 PM EST
The Canadian Auto Workers union welcomes the finalization of a new and independent trust fund that will cover the costs of supplementary health care benefits for retirees from General Motors Canada.
The fund, called the Auto Sector Retiree Health Care Trust (asrTrust), was negotiated as part of the government-supported restructuring of General Motors in the spring of 2009. Following two years of legal implementation and consultation with GM retirees, the trust has now been approved by the Ontario Court of Justice and will take effect. This system has already been in place providing supplementary health care benefits for retired workers at Chrysler Canada since the beginning of this year. The terms of the GM program took longer to implement due to more complex legal and economic issues, and the much larger number of retirees at the company.
Supplementary health benefits (including prescription drug coverage, dental and vision care, etc.) will now be provided to the estimated 32,000 Canadian retirees of GM by the independent trust fund, instead of by the company. GM Canada will pay a total of over $2.5 billion into the fund over the next seven years, beginning with an initial contribution of $1 billion (adjusted for interest, the costs of benefits in 2010 and 2011, and some administrative costs).
The funds contributed by GM, plus investment income earned on those assets, will be used to fund retiree health benefits (including benefits for existing workers at GM, after they retire). The independent trust therefore has assets from which to pay future benefits, so that security of benefits is no longer dependent exclusively on the financial health of General Motors Canada.
"This represents the final step in the restructuring of GM Canada, and now we can move forward with focusing on ensuring GM's future success and presence in Canada," said CAW President Ken Lewenza.
"While the HCT system is not perfect, it provides our retirees with a level of security for future benefits that is far preferable to the previous system," Lewenza added. "Without the HCT, if a company goes bankrupt, retiree health benefits are lost completely. Now we have money in the bank to ensure at least partial payment of benefits, no matter what."
Lewenza also complimented the work of the independent retirees' steering committee, and their independent legal and financial advisors, for their work over the last two years to strengthen the funding base for the GM HCT. The independent retirees' committee was able to negotiate additional funding commitments by GM, equal to $260 million, above and beyond the funding initially committed by the company in 2009.
The HCT will be managed by an independent board of trustees that includes a number of well known and highly respected experts in the fields of health care policy and investments.