AP: Legal Move Pushes GM Retiree Plan Ahead

[Omaha Steve]

http://money.excite.com/jsp/nw/nwdt_rt_top.jsp?news_id=ap-d8uvuf600&

Saturday February 23, 4:27 AM EST

DETROIT (AP) — The United Auto Workers and General Motors Corp. have taken a big legal step toward shifting billions in retiree health care costs from the automaker to an independent trust fund.

The union and attorneys representing several retirees sued GM on Thursday in U.S. District Court in Detroit in an effort to get court approval of the change. It would cover about 500,000 GM retirees and spouses, plus current UAW workers when they retire.

The lawsuit is not a hostile action. GM will not oppose its major points and joined the UAW and retirees in filing a settlement agreement that would govern how the trust would be run.

If the court approves, the trust will take on $46.7 billion in health care costs starting as early as Jan. 1, 2010.

According to court records, GM will pay $33 billion to $36.5 billion into the trust, called a voluntary employees beneficiary association, or VEBA.

GM, Ford Motor Co., Chrysler LLC and the UAW all agreed to form trusts in contract talks last year, and court approval similar to that needed for the GM trust is required in the Ford and Chrysler cases. The court needs to approve the change because the retirees are affected by the new contracts, but were not involved in those negotiations.

FULL story at link.