U.S. Labor Department proposes exemption to allow new health plan for General Motors…
U.S. Labor Department proposes exemption to allow new health plan for General
Motors retirees to acquire company securities
WASHINGTON, Sept. 17 /PRNewswire-USNewswire/ -- The U.S. Department of Labor's
Employee Benefits Security Administration (EBSA) today announced a proposed
exemption that, if granted, would allow the General Motors Co. (GM) to
transfer company securities including common stock, preferred stock and a $2.5
billion promissory note, to a health plan established for the company's
retirees. The retiree health plan will cover approximately 700,000 retirees
and dependents when it becomes effective on Dec. 31, 2009.
GM is the successor company that purchased substantially all of the assets of
General Motors Corp. (the old GM), which filed for bankruptcy on June 1, 2009.
GM is headquartered in Detroit, Mich.
The large transfer of employer securities to the plan violates the Employee
Retirement Income Security Act (ERISA). ERISA prohibits certain plans from
holding large percentages of plan assets in the form of employer securities.
The law gives the department authority, however, to grant exemptions that
protect the interests of plan participants and beneficiaries.
The exemption would allow the securities transfer, permit GM 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 GM to recover
mistaken deposits to the plan.
A major condition of the proposal is the appointment of an independent
fiduciary to represent the plan with regard to GM 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 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. In
addition, the proposal set time limits for return of mistaken deposits and an
objective dispute resolution process.
The proposed exemption is scheduled to be published in the Sept. 18, 2009,
edition of the Federal Register. Comments on the proposal and any requests
for a public hearing should be submitted to firstname.lastname@example.org 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-11568.
U.S. Department of Labor releases are accessible on the Internet at
http://www.dol.gov. The information in this news release will be made
available in alternate format (large print, Braille, audio tape or disc) from
the COAST office upon request. Please specify which news release when placing
your request at 202-693-7828 or TTY 202-693-7755. The Labor Department is
committed to providing America's employers and employees with easy access to
understandable information on how to comply with its laws and regulations. For
more information, please visit http://www.dol.gov/compliance.
SOURCE U.S. Department of Labor
Gloria Della of U.S. Department of Labor, +1-202-693-8664