General Motors Corp. says it has reached a tentative agreement with the United
Auto Workers to reduce the company's healthcare costs significantly.
For a Limited Time receive a
FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with
customized information for your industry, location, and job.
Get Your Report Now!The company estimates that the tentative agreement, subject to finalized language
and UAW-GM member ratification, would reduce GM's retiree healthcare liabilities
by about $15 billion, or 25 percent of the company's hourly worker healthcare
liability, and cut GM's annual employee healthcare expense by about $3 billion
on a pre-tax basis. The company estimates that cash savings would be about $1
billion a year.
The tentative agreement also includes contributions to a new independent Defined
Contribution Voluntary Employee Benefit Association (VEBA) that the company
says will be used to mitigate the impact of reduced GM healthcare coverage on
individual hourly retirees. The new independent VEBA will be partially funded
by GM contributions of $1 billion in each of three years--currently expected
to be 2006, 2007 and 2011.
The company says it will share details regarding modifications to the healthcare
plan with affected employees and retirees soon.
Recently, the company informed its salaried U.S. employees and retirees of
additional changes to their healthcare benefits, including higher medical co-pays.
In addition, as announced earlier, there is no program for salary increases,
no bonuses, and no enhanced variable pay for 2005 for GM's salaried employees
and executives, according to the company.