General Motors retirees jump for joy
Business Editor
The Canadian Auto Workers union has implemented a new independent trust fund, called the Auto Sector Retiree Health Care Trust, which aims to cover the costs of supplementary health care benefits for General Motors Canada retirees and CAW represented employees as of June 8, 2009.
“The new healthcare trust is another step forward as we work to de-risk and strengthen our balance sheet and position the company for sustainable profitability,” said Dan Ammann, GM senior vice president and chief financial officer.
The HCT became effective Oct. 31, 2011 and was initiated following the government-supported restructuring of the company in spring of 2009 and mimics a similar fund already set in place at Chrysler Canada. General Motors Canada will be financially exempt from providing healthcare benefit funding for eligible CAW represented retirees, surviving spouses and dependents. To compensate, the company will transfer C$0.8 billion in cash as issue C$1.1 billion of notes to the HCT.
"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.
The trust fund will provide supplementary health benefits to approximately 32,000 Canadian GM retirees, injecting upwards of $2.5 billion into the fund over the span of seven years; benefits include prescription drug coverage as well as dental and vision care.
"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."
Funding for retirees will be based on contributions by General Motors Canada as well as investment income earned on those assets. General Motors plans to diminish its post-employment liabilities by roughly C$3 billion. The independent trust includes assets from which cialis canadian drugs payments for future benefits will be made, releasing GM from financial obligations.
An independent board of trustees including various highly reputable experts in the health care and investment field will manage the HCT.
