The VEBA would provide retiree health benefits for
about 120,000 retirees and dependents when it becomes
effective on Jan. 1, 2010, EBSA said in a news
release.
The company said New Chrysler had asked for such an
exemption under the Employee Retirement Income Security Act
(ERISA) so the VEBA could hold stock and debt of New
Chrysler to facilitate the sale of the company to Fiat
North America LLC (see
Chrysler VEBA Funded in Post-Bankruptcy Deal
).
While
ERISA bars certain plans from holding large
percentages of plan assets in the form of employer
securities, the Department of Labor has the authority to
exempt a plan from the provision.
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According to the news release, the exemption would
allow the securities transfer, permit New Chrysler 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 the automaker to recover
mistaken deposits 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
Ford and General Motors for their respective
retirees.
There will be separate accounting for each plan maintained
by the three companies that are now funded through a single
trust.
Independent Fiduciary Appointment
EBSA said the primary condition of the proposal is
the appointment of an independent fiduciary to represent
the plan with regard to New Chrysler 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.
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The proposed exemption also requires the review of
benefit payments by an independent third party
administrator and auditor for each of the plans and an
objective dispute resolution process, regulators
said.
In addition, the proposal sets time limits for the return
of mistaken deposits and an objective dispute resolution
process.
The proposed exemption is scheduled to be published
in the October 5, 2009, edition of the Federal
Register.
Comments on the proposal and any requests for a
public hearing should be submitted to
Chrysler@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. N.W., Washington, D.C. 20210, Attention:
Application Number L-11566.