IUE-CWA Negotiates Agreement on GM Health Care, Delphi Pensions

Dayton, Ohio

On September 1, IUE-CWA reached a tentative agreement with new General Motors to provide baseline security for retirees who were facing the loss of health care and pensions.

The agreement was announced three months after GM filed for bankruptcy and launched one of the Division's largest mobilizations in recent years.

In filing for bankruptcy protection, GM made it be known that it would use a process known as a 363 sale to essentially sell the profitable parts of the company back to itself and the federal government and leave liabilities — including retiree health care, worker buyout payments and Delphi pension backstops — in the old, bankrupt GM.

IUE-CWA was concerned about a pattern being set for how companies could further exploit bankruptcy law to shed obligations to workers.

With the June 1 bankruptcy announcement, GM officially closed the door on any hope IUE-CWA had of forcing GM to live up to the VEBA, or voluntary employee beneficiary agreement, it had reached with the Division in December 2008.

That agreement would have provided $2.4 billion in a VEBA to provide health care coverage for GM retirees and their families. Some 41,000 found their benefits at risk since GM agreed to back stop health and life benefits for IUE-CWA retirees from Delphi Corp., which has been in bankruptcy court since October 2005.

GM had backed away from the VEBA after receiving U.S. Treasury Department funding, claiming the government deal precluded any changes in its pension plan.

New GM offered a high-deductible plan for pre-65 retirees and wanted to eliminate any benefits for post-65 or Medicare eligible retirees. The proposal was much less than that received by United Auto Workers retirees whose VEBA was funded, though renegotiated to be 50 percent stock.

IUE-CWA fought back hard with a series of major newspaper ads, outreach on Capitol Hill and to the Obama administration, picketing in front of the bankruptcy court and at appearances of President Obama and Vice President Joe Biden, and a massive email and phone campaign to the White House and Treasury Department.

A bi-partisan group of members from Ohio's congressional delegation sent two letters demanding justice for the IUE-CWA retirees. Rep. Mike Turner (R-Ohio) spoke out against the unjust treatment of non-UAW retirees from the floor of the House, and Rep. Tim Ryan introduced legislation to fund a VEBA to improve health care options for the retirees. That bill is still under consideration.

Another huge source of support was Sen. Sherrod Brown, whose office stayed on top of talks and who repeatedly called the Treasury Department himself throughout the process to seek a fair hearing for union concerns.

Much of the focus of political activities centered on Ohio because the vast majority of those impacted live there, primarily in the Dayton and Warren areas.

In the end, IUE-CWA made clear improvements to GM's original proposal but was not able to move the company or its new owner, the U.S. government, into restructuring the deal.

Under the final agreement, which still must be approved by the bankruptcy court, pre-65 retirees covered by GM insurance will be offered an improved package with an extra $50 million in payments. Post-65 retirees will retain a $1 billion claim with old GM, now known as Motors Liquidation Co.

The agreement also secures a "top-up" from new General Motors for Delphi retirees whose pension was surrendered to the Pension Benefit Guaranty Corporation. Because of that action the former Delphi workers stood to lose half of their income without this agreement.

"We were faced with very difficult decisions," said IUE-CWA President Jim Clark. "Everyday we hear from severely ill retirees who would literally face a death sentence with the loss of health care and from retirees who would face bankruptcy if their pensions were slashed.

"Though this package falls short of what our retirees worked years to gain, under these circumstances with two major employers in bankruptcy we are pleased in what we were able to accomplish," Clark continued. "This was the best we could get in a dreadful situation."

With the accord, new GM will honor its 1999 Benefit Guarantee and the 2007 tri-partite Memorandum of Understanding to ensure that eligible retirees at Delphi are made whole if the PBGC reduces their pensions. Reductions could be made because the PBGC is not required to pay early retirement supplements or benefit increases made within the last five years.

The top-up also covers Delphi retirees in the process of growing into a pension benefit from a mutual retirement or the special pre-retirement package offered in the 2007 MOU.

GM had originally offered $417 million to provide health care coverage to eligible non-UAW pre-65 retirees and their dependents – and wanted to keep any unused money due to attrition for itself. Union negotiators won the additional $50 million and a commitment that the entire amount will be spent on health care for union retirees.

The current health care plan, including dental and vision benefits, remains in effect for all current participants until Dec. 31, 2009. Eligible pre-65 retirees will start to receive information on the cost of the modified-high deductible plan and forms to elect whether they want to take it in early fall. IUE-CWA intends to offer a one-time buy-out option for those pre-65 retirees who opt not to take the plan. Once retirees reach 65, and for those already over 65, GM-provided coverage will be eliminated.

Those over 65 or otherwise Medicare eligible could receive benefits or proceeds from a $1 billion claim that will remain against Motors Liquidation Co. in the bankruptcy court. The amount and timing of any liquidation are impossible to estimate. IUE-CWA will remain on the unsecured creditors committee to maximize recovery for those retirees.

Retaining any claim was a huge battle that new GM fiercely opposed.

IUE-CWA is working with locals to provide a service to Medicare-eligible retirees to help them select supplemental insurance that is best for their personal medical and financial situations.

The $467 million and the $1 billion claim are monies that cover not just IUE-CWA retirees, but all of the union retirees who were excluded in the UAW-GM deal.

"We deliberately proceeded in these talks with a goal of being inclusive of those in other unions. We believe we had a moral obligation not to leave those brothers and sisters out in the cold," said Clark. "Whatever slim leverage we had, they had little or none. Our talks were the only way to win some measure of health care coverage for those retirees."

Other union retirees who could receive health care benefits under the deal include the Electrical Workers, Operating Engineers, Machinists, Teamsters, Carpenters and Steelworkers. The USW was a partner with IUE-CWA in the negotiations.

The agreement also provides $10,000 life insurance coverage that does not reduce with age.

Further, the agreement also provides that new GM will assume IUE-CWA Local 798's closing agreement for the Moraine Truck and Bus plant and fulfill obligations for buy-out payments. In order to secure movement of the agreement to new GM, the company insisted that IUE-CWA accept the UAW concession to cut supplemental unemployment benefits in half the second year.

Clark stated that the union will continue to pressure the government to improve the health care coverage of the GM and Delphi retirees.

"These workers earned high quality health care coverage and the government has now allowed for it to be taken away," he stated. "There is nothing in this agreement that precludes the Treasury Department and the Obama Administration from recognizing the injustice they have caused and correcting the situation – either on their own or as directed through congressional action. We will continue to pursue justice through every avenue available to us."