Under a U.S. Labor Department proposal, Ford Motor Co. would be allowed to transfer company securities to a voluntary employee beneficiary association (VEBA) trust to fund a new health plan for company retirees.
In a statement released very recently, the department said that the plan is expected to cover more than 285,000 retirees and their dependents, as well as a small number of active retirees.
Just so the VEBA plan can keep a larger amount of securities than what is allowed under the law, the government had proposed that Ford's request for an exemption under the Employee Retirement Income Security Act be granted.
The department related that the plan originated from a 2007 agreement between Ford and the UAW. Ford spokeswoman Marcey Evans said that its health care costs were completely out of control and so the company had to do something to manage it.
Meanwhile, department spokeswoman Gloria Della said that Ford was the last of the Detroit 3 to separate its retiree health plan assets from those of its active employees.
Moreover, Ford will contribute to the trust two promissory notes payable to the VEBA, warrants to buy Ford common stock, and $580 million in cash. VEBA also will be funded with assets from other Ford health plans.