President &
CEO, Lance

  • Member of the
    AICPA faculty of
  • AICPA author,
    instructor &
    national speaker.
  • National Society of
    Speaker of the
  • Writes financial
    articles for over 50
Union agrees to take half from Detroit 3


With ranks of active UAW workers shrinking and the pool
of retirees growing, the union's decision to accept half of
what General Motors and Chrysler owe to the retiree
health care trust is putting the fund on shaky ground.

Called a
Voluntary Employee Beneficiary Association, or
VEBA, the trust fund was hailed as part of a
transformational labor deal the UAW reached with
Chrysler, Ford and General Motors in 2007.

The union would take responsibility for managing health
care benefits for retirees. The automakers, meanwhile,
would get to take a crushing cost off their books.

But to get it started, all three companies agreed to make
huge initial payments -- GM had to pay $20 billion, while
Chrysler's tab was $10.6 billion. Now, with the UAW's
consent, each company will pay half those amounts. "I
said a year ago it wasn't viable when the market was
going up," said Lance Wallach, a consultant in New York.
Now, he said the VEBA is even less feasible.

"Instead of the VEBA failing in 15 years, now it will fail in
Wallach said.

As GM announced plans to shed an additional 7,000 to
8,000 hourly jobs, the pool of people who may someday
depend on the VEBA is swelling.

"Everyone is very concerned about losing their health
care. That's what the union fought for," said Kandy
O'Neill, 40, who works at GM's Orion Township assembly
plant. Thousands of hourly workers won't have the luxury
of retiring early. If their plants close, they may have to
shop for new coverage.

Arthur Augustus, who has 31 years with GM, said he
thinks about retiring all the time. "But I'm worried about my
pension and my health insurance," he said as he left work
at the Detroit-Hamtramck assembly plant Monday.

Mike Earl, who works at the Delta Township assembly
plant near Lansing, said he's nervous, even though his
plant is to run without any breaks through summer.

"There's going to be people all over the nation laid off
with more seniority than me," he said. "I could lose my

Lance Wallach, CLU, ChFC, CIMC, speaks and writes about benefit
plans, tax reductions strategies, and financial plans. He has
authored numerous books for the AICPA, Bisk Total tape, and
others. He can be reached at (516) 938-5007 or lawallach@aol.
com. For more articles on this or other subjects, feel free to visit
his website at

Lance Wallach, the National Society of Accountants Speaker of
the Year, speaks and writes extensively about retirement plans,
Circular 230 problems and tax reduction strategies. He speaks at
more than 40 conventions annually, writes for over 50
publications, is quoted regularly in the press, and has written
numerous best-selling AICPA books, including Avoiding Circular
230 Malpractice Traps and Common Abusive Business Hot Spots.
He does extensive expert witness work and has never lost a
case.  Contact him at 516.938.5007 or visit

The information provided herein is not intended as legal, accounting,
financial or any other type of advice for any specific individual or other
entity.  You should contact an appropriate professional for any such

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