GM Salaried Retirees Face Two-Third Benefit Reduction - Letter
June 09 2009 - 2:42PM
Dow Jones News
General Motors Corp. (GMGMQ) is further slashing benefits to
retired white-collar workers and their dependents, according to a
letter sent to retirees.
GM will no longer provide vision, dental and extended-care
coverage to retired workers. Only medical and prescription-drug
coverage will continue.
Life insurance also will be reduced. Retirees will receive life
insurance worth half their annual base salary, down from 75%
previously.
"These are very difficult changes to make, but unfortunately
necessary to position the New GM to win - and win now," GM Chief
Executive Fritz Henderson said in a message to white-collar
retirees.
The cuts come in addition to deep reductions made in recent
years as GM has undergone a wrenching restructuring in recent
years. GM has around 116,000 salaried retirees.
Salaried retirees have faced increases in co-pays, deductibles
and life insurance. Recently, the auto maker eliminated medical
coverage for retirees eligible for Medicare. The most recent cuts
affect retirees not covered by Medicare.
GM has said it intends to continue funding pension plans for all
retired workers.
GM's move to cut benefits faces opposition in bankruptcy court
from a retiree group challenging the cuts and seeking separate
representation.
The bankruptcy court judge overseeing GM's case will hold a
hearing in New York on June 25 to consider granting the retiree
association's request to appoint a committee so they can negotiate
with the company and protect their interests.
Under GM's proposed overhaul, retirees represented by the United
Auto Workers union will continue to have their health benefits
funded, but could see substantial cuts. As part of GM's new deal
with the UAW, the auto maker will pay half the $20 billion owed to
the retiree trust plus give the trust an equity stake in the new
company.
-By Sharon Terlep; Dow Jones Newswires, 248-204-5532;
sharon.terlep@dowjones.com.