GMRA supports the 2010 NRLN Legislative Agenda, available at www.nrln.org with a focus on the following areas that directly impact GM retirees.
PENSION ASSET PROTECTION (PAP)
The NRLN advocates legislation that stops corporations from taking pension assets from defined pension plan trusts to pay for lump sum severance and early retirement incentives or to pay executive non-qualified pensions and other deferred compensation. The NRLN advocates that pension plan assets should not be transferred to or be taken over by third party financial or other institutions.
General Motors used pension assets to pay for $3 billion in lump sum severance payments during 2008, creating such significant pension plan under-funding that the Treasury Department restricted this practice as a condition of federal bailout loans.
GM should not be able to tap pension plan assets for restructuring and reorganization expenses. GMRA participated in the development of a NRLN White Paper submitted to Congressional leaders in May 2009 addressing the need for legislation to permanently prevent GM and other companies from using pension plan assets for corporate restructuring, severance allowances and lump sum buyouts. As a result of the White Paper, this provision is now included in a pension protection bill in draft form in the House.
GMRA has given financial support to the development of a 2010 NRLN White Paper focused on protecting the pension plan assets of retirees in the case of a merger or acquisition by a foreign owner. In such cases, the parent foreign owner would be obligated to abide by ERISA guidelines if its U.S. subsidiary is spun off or dissolved.
Pension Benefit Guaranty Corp. Procedures
The NRLN advocates that the Pension Benefits Guaranty Corporation (PBGC) must be regulated to ensure equitable calculations of benefit payments earned by retirees.
GMRA is supporting NRLN in advocating for new regulations to ensure that PBGC formula calculations are standardized, and the rules are modified, to ensure pension plan beneficiaries are treated fairly. The existing complex set of rules and formulas used by the PBGC to determine benefit entitlement in terminated pension plans disadvantage retirees.
Pension benefits turned over to the PBGC are not fully guaranteed. According to PBGC formulas, certain vested pension benefits can be disqualified resulting in a significantly lower benefit. For example, the recently terminated Delphi salaried pension plan resulted in some younger Delphi retirees losing up to 70 percent of their pension.
Bankruptcy Reform
The NRLN advocates that bankruptcy reform is needed to place retirees pensions and benefits on the list of obligations that companies cannot shed. Retirees often lose pension, and benefits such as health care, and other deferred compensation
retirees, unlike secured creditors, rarely have the ability to recover losses.
The GM Bankruptcy proceedings of 2009 made it evident that bankruptcy laws need to be rewritten to ensure that obligations to retirees are protected. Unlike “secured creditors,” retirees are currently subject to devastating losses at the hands of bankruptcy courts.
Health Care
Inclusion of Catastrophic Coverage in Medicare
The NRLN advocates that Congress should extend protection against catastrophic medical costs to the Medicare population by setting a reasonable maximum limit on out-of-pocket costs.
When GM eliminated the company-sponsored health care plan for Medicare-eligible retirees on Jan. 1, 2009, retirees age 65 and older lost "catastrophic coverage" which limited out- of-pocket medical expenses to a fixed amount. Given this loss by GM and other retirees, Congress should add catastrophic coverage to Medicare as part of upcoming health care reforms by setting reasonable maximum limits on out-of pocket expenses.
Medicare Buy-In for Ages 55-64
The NRLN advocates that adults age 55 to 64 should be allowed to buy Medicare coverage at a cost that does not burden the Medicare system. Access could be limited to individuals without access to an employer-sponsored or other group health plan that is actuarially equivalent or superior to Medicare.
Many GM retirees age 50 to 64 who have been laid off or retired early—either forced or voluntary—are facing financial hardship attempting to absorb the higher costs of health care insurance. GMRA supports the NRLN proposal that all such retirees should be allowed to buy into Medicare at a reasonable cost if they do not have access to an employer-sponsored or other group health plan that is equivalent to Medicare.
High Cost of Prescription Drugs
Beyond filling the Medicare Part-D “doughnut hole,” Congress must take action that addresses U.S. drug prices that are far too high. Many retirees will continue to suffer with exorbitant prices even if the doughnut hole were to be eliminated.
GMRA supports health care reform legislation that includes funding to eliminate what is often referred to as the "doughnut hole” -- that portion of prescription drug expense that is not covered by Medicare Part D. This is an issue that already affects over-65 retirees and their dependents.
Protection and Enhancement of Retiree Health Care Benefits
The NRLN advocates a Maintenance of Cost Payment (MCP) proposal that would establish a fixed monthly payment to retirees that is equivalent to the value an employer provided plan prior to the reduction or cancellation of retirement health care, prescription drugs, life insurance, long-term care or other benefits. Companies would be entitled to tax credits as an offset to MCP payments.
GMRA supports health care reform legislation to repair broken promises to GM retirees by providing a Maintenance of Cost Payment (MCP). The MCP would establish a fixed monthly payment that is equivalent to the dollar value of benefits an employer provided at the time of retirement. The MCP could be used to purchase replacement coverage for those lost benefits to the extent possible.
