DOL Issues Final Exemption to Allow New Health Plan for Ford Motor Co. Retirees to Acquire Company Securities
Ford Motor Co. has been granted an exemption by the U.S Department of Labor under its Employee Retirement Income Security Act. This was done in an attempt to transfer the company securities to a voluntary employee beneficiary association trust. Accordingly the Ford Motor Co. assisted by VEBA will now be able to offer health benefits to the company’s retirees through a new health plan.
More than 285,000 retirees along with their dependants will be covered by the new health plan. In addition a few of the active employees will also benefit from this plan. With regard to the new health plan, Ford Motor Co. has planned to contribute over $13.2 billion towards VEBA.
Ford Motor Co. based in Dearborn, Mich., had filed request for an exemption with the U.S Department of Labor to let the VEBA plan, receive, and hold ford securities in excess of the amount permitted from an employer under the Employee Retirement Income Security Act (ERISA). The ERISA sets standards for pension and health benefit plans in private industries. Under this law the U.S. DOL is authorized to grant exemptions in favor of the plan participants and beneficiaries as well.
With this exemption been granted under the DOL employee benefits, the Ford Motor Co. will now be permitted to go ahead with an agreement with the United Auto Workers (UAW) to contribute $13.2 billion in two notes.
During the transition period, the health plans and VEBA can repay each other the benefit payments that are paid by mistake. If there are any securities wrongly paid to the plan, the Ford Motor Co. also have an option to claim it back. The exemption has appointed an independent fiduciary to represent the new health plan. The trust that holds the assets of plans set up by Chrysler and General Motors will hold the VEBA plan assets too. The VEBA trust has separate retiree accounts for each plan.