Proposed Exemption to Allow New Health Plan for General Motors Retirees

 

GM is the successor company that purchased substantially all of the assets of General Motors Corp. (the old GM), which filed for bankruptcy on June 1, 2009. GM has its headquarters in Detroit. Courtesy of edmunds Daily

U.S. Department of Labor's Employee Benefits Security Administration announced a proposed exemption that, if granted, would allow the General Motors Co. (GM) to transfer company securities including common stock, preferred stock and a $2.5 billion promissory note, to a health plan established for the company's retirees. The retiree health plan will cover about 700,000 retirees and dependents when it becomes effective on Dec. 31, 2009.

The large transfer of employer securities to the plan violates the Employee Retirement Income Security Act (ERISA). ERISA prohibits certain plans from holding large percentages of plan assets in the form of employer securities. The law gives the department authority, however, to grant exemptions that protect the interests of plan participants and beneficiaries.

The exemption would allow the securities transfer, permit GM and its health plans to reimburse each other for benefit payments mistakenly paid by the wrong entity during the transition to the new plan, and permit GM to recover mistaken deposits to the plan.

-  Courtesy of U.S. Labor Department