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U.S. Labor Department proposes exemption to allow new health plan for Ford Motor Co. retirees to acquire company securities
Washington — The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has announced a proposed exemption that, if granted, would allow the Ford Motor Co. to transfer company securities to a voluntary employee beneficiary association (VEBA) trust, which would fund a new health plan established to provide health benefits for the company’s retirees. The new health plan would cover in excess of 285,000 retirees and their dependents, and a small number of active employees.
Under a recent settlement agreement in federal district court in Michigan between Ford and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, Ford requested an exemption under the Employee Retirement Income Security Act (ERISA) to allow the VEBA plan to receive and hold employer securities of Ford in excess of the amount and kind allowed under ERISA. The law gives the Labor Department authority to grant exemptions that protect the interests of plan participants and beneficiaries.
Ford is headquartered in Dearborn, Michigan, and as of December 31, 2008, the latest data available, employed approximately 71,000 employees nationwide. According to its December 31, 2008, consolidated balance sheet, the company had $218 billion in assets.
The exemption would permit the transfer of securities, permit Ford and its health plans to reimburse each other for benefit payments mistakenly paid by the wrong entity during the transition of benefits coverage to the new plan, and permit the automaker to recover deposits mistakenly made to the plan.
The assets of the VEBA plan will be held by the same trust that holds the assets of the plans established by Chrysler and General Motors for their respective retirees. However, there will be three separate retiree accounts for each plan that is funded through the VEBA trust.
The primary condition of the proposal is the appointment of an independent fiduciary to represent the plan with regard to Ford securities transactions. The independent fiduciary will determine in advance of taking any action regarding the securities that the action is in the interests of the plan and its participants and beneficiaries. The proposed exemption also would require the review of benefit payments by an independent third party administrator and auditor for each of the plans and an objective dispute resolution process. In addition, the proposal sets time limits for the return of mistaken deposits and an objective dispute resolution process.
The proposed exemption was published in the December 8 edition of the Federal Register. Comments on the proposal and any requests for a public hearing should be submitted to Ford@dol.gov or by fax to 202.219.0204. Paper-based comments should be sent to the Office of Exemption Determinations, Employee Benefits Security Administration, Room N-5700, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, D.C. 20210, Attention: Application Number L-11575.