WASHINGTON -- Ford Motor Co. would be allowed to transfer company securities to a voluntary employee beneficiary association (VEBA) trust to fund a new health plan for company retirees under a U.S. Labor Department proposal.
The plan would cover more than 285,000 retirees and their dependents, as well as a small number of active retirees, the department said today in a statement.
The government proposed granting Ford's request for an exemption under the Employee Retirement Income Security Act to let the VEBA plan keep a larger amount of securities than that allowed under the law, the statement said.
The plan stems from a 2007 agreement between Ford and the UAW, the department said.
"Our health-care costs were completely out of control, and we needed to do something to get them under control," Ford spokeswoman Marcey Evans said.
Ford is the last of the Detroit 3 to separate its retiree health plan assets from those of its active employees, department spokeswoman Gloria Della said.
Ford will contribute to the trust two promissory notes payable by the automaker to the VEBA, warrants to buy Ford common stock, and $580 million in cash, Della said. VEBA also will be funded with assets from other Ford health plans, she said.
Ford's assets will be held by the same trust that holds those for General Motors Co. and Chrysler Group retiree plans, the statement said. There will be three separate accounts for each plan funded through the VEBA trust.
The primary condition of the department's proposal is the appointment of an independent fiduciary to represent the plan on any action involving the Ford securities, the statement said.
The fiduciary is to determine in advance that any action involving securities is in the interest of the plan and its participants and beneficiaries, the statement said.
The department's proposal invites public comment.