Union: GM agrees to pay $50M more for Delphi retiree health care

David Shepardson / Detroit News Washington Bureau

Washington -- General Motors Co. has agreed to pay another $50 million to fund health benefits to nearly 50,000 hourly retirees and dependents at Delphi Corp. who were represented by the IUE-CWA and other smaller unions, union officials said today.

GM also agreed to a number of other concessions in the deal announced Tuesday, the IUE-CWA announced. It said the unions have reached a tentative agreement with GM for the automaker "to provide baseline security for retirees who are facing the loss of health care and pensions."

Asked the company's response, GM spokeswoman Susan Garavaglia said in a statement that the "old" and "new" GM companies, which were split in bankruptcy proceedings, "have been in negotiations with the IUE to come to a resolution on retiree health care issues. We are finalizing our discussions and will not be able to provide any additional comments until this has been concluded."

Under the agreement reported by the union, retirees under age 65 who are covered by GM insurance will be offered an improved package with an extra $50 million in payments from the automaker to defray the cost of the high-deductible coverage originally offered. It wasn't immediately clear what the additional money will mean for premiums.

The deal reportedly will allow GM to end coverage for Medicaid-eligible retirees.

The IUE-CWA said the deal includes a "top-up" from GM for Delphi retirees, whose pensions were terminated and being assumed by the Pension Benefit Guaranty Corp., a federal corporation that protects the pensions of American workers.

IUE-CWA said some former Delphi workers stood to lose half of their income without this agreement.

"We were faced with very difficult decisions," said IUE-CWA President Jim Clark. "Every day we hear from severely ill retirees who would literally face a death sentence with the loss of health care and from retirees who would face bankruptcy if their pensions were slashed."

He said the deal was "the best we could get in a dreadful situation."

About 6,200 United Steelworkers and dependents and 41,000 IUE-CWA retirees are covered by the action. The unions had warned the retirees would lose, in total, about $3.5 billion in benefits.

Post-65 retirees will retain a $1 billion claim with old GM, now known as Motors Liquidation Co., which remains in U.S. Bankruptcy Court in New York. It is not clear what value, if any, that claim might have.

A bipartisan group of U.S. House members from Ohio urged Treasury Secretary Tim Geithner in June to treat all of the unions equally. The issue has drawn considerable attention in Ohio, where many of the retirees live.

"In short, it is your representatives who have decided that these retirees will not have an opportunity for a decent retirement," the Ohio lawmakers wrote.

By contrast, the UAW's Voluntary Employee Beneficiary Association, which provides for retiree health insurance for GM and Delphi hourly retirees, received significant financial aid to fund health care coverage during GM's bankruptcy.

GM agreed to provide $10 billion in cash, a $2.5 billion note and 17.5 percent of stock in the new GM.

With the accord, the new GM will honor its 1999 promise to ensure that eligible Delphi retirees aren't harmed if the PBGC reduces their pensions. Reductions could be made because the PBGC is not required to pay early retirement supplements or benefit increases made within the last five years.

GM had originally offered $417 million to provide health care coverage to eligible non-UAW pre-65 retirees and their dependents, and wanted to keep any unused money due to attrition.

Union negotiators won an additional $50 million during the bargaining with GM and the U.S. Treasury, including a commitment that the entire amount will be spent on health care for union retirees.

The current health care plan, including dental and vision benefits, remains in effect for all current participants until Dec. 31.

Eligible pre-65 retirees will start to receive information on the cost of the modified, high-deductible plan and forms to elect whether they want to take it in early fall.

The IUE-CWA took a shot at the UAW, noting it chose to include all of the other unions.

"We deliberately proceeded in these talks with a goal of being inclusive of those in other unions. We believe we had a moral obligation not to leave those brothers and sisters out in the cold," said Clark. "Whatever slim leverage we had, they had little or none. Our talks were the only way to win some measure of health care coverage for those retirees."

Other retirees who could receive health care benefits under the deal include members of the Electrical Workers, Operating Engineers, Machinists, Teamsters, Carpenters and Steelworkers unions. The USW was a partner with IUE-CWA in the negotiations.

The agreement also provides $10,000 life insurance coverage that does not reduce with age.

The deal means GM will assume IUE-CWA Local 798's closing agreement for the Moraine (Ohio) Truck and Bus plant and fulfill obligations for buyout payments.

In order to secure movement of the agreement to new GM, the company insisted that IUE-CWA accept the UAW concession to cut supplemental unemployment benefits in half the second year.

dshepardson@detnews.com (202) 662-8735