Chances are you’ve heard of how GM and the United Auto Workers Union reached an agreement a day after the UAW struck and one of the components of that deal was the creation of a Voluntary Employees Beneficiary Association. I’m not sure if this is a benefit to the UAW or GM but both seem to win on the proposition, at least a little bit.
In return for putting 70% of GM’s employee health care obligations, GM gets to pull it off the books. GM would put the $36 billion into a trust known as a Voluntary Employees Beneficiary Association, or VEBA, and that VEBA would then secure the retirement of its nearly 340,000 hourly retirees and spouses. What do the retirees get? They get some comfort that if GM ever does go bankrupt, their retirement benefits would be protected inside the VEBA. The UAW, which has pulled for this as well, projects it will last at least 80 years.
That’s GM-UAW’s VEBA, what about VEBA’s in general? Well, for that I recommend this great article about Voluntary Employees Beneficiary Associations that I may one day in the future summarize for my own consumption.
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