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EBSA Proposes Exemption for Ford VEBA to Acquire Company Stock
December 9, 2009 (PLANSPONSOR.com) - The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has announced a proposed exemption that would allow the Ford Motor Co. to transfer company securities to a voluntary employee beneficiary association (VEBA) trust which would provide health benefits to retirees.
An EBSA news release said the new health plan would cover
in excess of 285,000 retirees and their dependents, and a small number of
active employees. The exemption would permit the transfer of securities, permit
Ford and its health plans to reimburse each other for benefit payments
mistakenly paid by the wrong entity during the transition of benefits coverage
to the new plan, and permit the automaker to recover deposits mistakenly made
to the plan.
The Employee Retirement Income Security Act (ERISA)
prohibits certain plans from holding large percentages of plan assets in the
form of employer securities; however, the law gives the department authority to
grant exemptions that protect the interests of plan participants and
beneficiaries.
The assets of the VEBA plan will be held by the same
trust that holds the assets of the plans established by Chrysler and General
Motors for their respective retirees; however, there will be three separate
retiree accounts for each plan that is funded through the VEBA trust. The
agency has already proposed the exemption for Chrysler (see EBSA Proposes ERISA Exemption for Chrysler VEBA) and GM (see DoL Proposes Exemption for GM VEBA to Hold Company Stock).
EBSA said the primary condition of its proposal is the appointment
of an independent fiduciary to represent the plan with regard to Ford
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 would require 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 sets time limits for the return of mistaken deposits and an objective
dispute resolution process.
The proposed exemption was published in the December 8 edition of the Federal Register. Comments on the proposal and any requests for a public hearing can be emailed to Ford@dol.gov or faxed 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. NW, Washington, D.C. 20210, Attention: Application Number L-11575.