GM Announces Retiree Benefits Cuts
In an internal document obtained by TheStreet.com, the company said it will withdraw health care benefits for salaried retirees, surviving spouses and eligible dependents under age 65 who may receive Medicare, effective January 1, 2010. GM spokesman Tom Wilkinson said the company would establish a company-funded health reimbursement account, to which GM will make a $260 tax-free monthly contribution for affected retirees or surviving spouses, according to TheStreet.com. When a retiree reaches age 65, an additional monthly pension payment of $300, announced last summer, will be paid.
The memo also said that starting May 1, 2009, life-insurance coverage provided by GM at two times a worker’s salary will be cut to 75% of the salary upon retirement, and after 10 years, will be reduced by an additional 25%. Current retirees also will be affected, the news report said.
On Tuesday, GM said it plans to cut 10,000 salaried jobs and lower pay by as much as 10%.
As part of a $15 billion liquidity boosting plan announced last July, GM put a halt on the establishment of a Voluntary Employees Beneficiary Association (VEBA) trust for retiree health care (see GM Puts the Brakes on Health Care VEBA ).
In October, the automaker announced it was suspending company match contributions to employee 401(k) plans (see Benefits Cuts Next on GM Agenda ).