The UAW posted a lengthy message to its retirees on Friday on itsFacebook page explaining why it had to agree to eliminate aChristmas bonus for former General Motors workers in its new four year agreement. “This year we face the worst shortfall in our history of pension underfunding,” the UAW said in a statement. “Because of Wall Street’s continuing problems, the GM hourly pension fund is seriously underfunded with a $15 billion to $20 billion shortfall.” The UAW and GM used these monies previously for buy-outs, among other things. Posting this on Facebook was weak.
UAW Statement on Retirees and 2011 Big Three Negotiations
The UAW has a long history of fighting for and protecting its retirees, and through the years, we have been able to bargain good pensions, Christmas bonuses, pension increases, health care benefit improvements, and other improvements for our retirees. We accomplished all these gains for retirees even though many years ago a Republican majority on the U.S. Supreme Court ruled that we do not have the right to strike over retiree issues.
In 2008, when the economy collapsed and General Motors and Chrysler were teetering on the edge of bankruptcy, many Republicans wanted to strip retirees of all health care benefits and throw our pensions to the Pension Benefit Guarantee Corporation (PBGC). If they had succeeded, GM and Chrysler pensions would have been reduced to about 65 percent of the basic pension and retirees would have been left without any health care. The UAW fought for retirees in the congressional hearings, through lobbying, protesting, and many other activities. GM and Chrysler retirees’ pensions and health care were saved as a result.
In the current round of auto bargaining, we were faced with two insurmountable obstacles to winning the gains we wanted for our retirees. First, in the past we were able to fund pension increases and Christmas bonuses out of the UAW GM pension fund because the pension funds were either fully-funded or, in some years even overfunded. This year we face the worst shortfall in our history of pension underfunding. Because of Wall Street’s continuing problems, the GM hourly pension fund is seriously underfunded with a $15 billion to 20 billion shortfall. Obviously because of this shortfall, we could not use the pension fund to pay for the Christmas bonuses or any other improvements.
The second insurmountable obstacle to winning Christmas bonuses for retirees is the current UAW GM retiree to active member ratio. The current active UAW membership at GM is 48,000 members to 405,000 UAW GM retirees, making it nearly a 10-to-1 ratio of retirees to current working members. During these negotiations, the UAW also explored the idea of paying for retiree Christmas bonuses by having each active member contribute to a fund to pay these bonuses. With the almost 10-to-1 ratio of retired to active workers, funding a $600 retiree bonus would require nearly $6,000 contribution from each active UAW GM member. Obviously, this is not possible in these economic times.
Finally, we were able to negotiate and ratify a 10 percent contribution from active members’ profit sharing that will be diverted to the Voluntary Employee Beneficiary Association (VEBA). This diversion helps to make possible the modified dental and vision coverage that will be restored by the VEBA for our UAW GM and Chrysler retirees in January 2012.
Our hope is that GM, with the continued dedication of our UAW members, will return to being a strong and viable company which will help GM stock rebound, and that the economy and our GM pension fund will also rebound, making it possible to win yearly bonuses for our retirees in the next negotiations in 2015.
Angry retirees are threatening to withhold voluntary dues payments after being shut out in the United Auto Workers tentative contract with General Motors.
For the first time in two generations, the tentative contract with GM includes no pension improvements. UAW President Bob King also said the retirees will not receive the $700 Christmas bonus, which retirees have interpreted as a pension cut. The elimination of the Christmas bonus was necessary to protect the financial integrity of the underfunded GM-UAW pension fund.
Last week, the union tried to soften the blow by announcing the voluntary employee benefit association, or VEBA, which is now responsible for providing health care for retirees, will add back dental and vision coverage that was eliminated during GM’s financial crisis in 2008 and 2009.
Preliminary figures indicate the tentative agreement without pension improvements will be ratified by a relatively narrow margin. Final results are due Thursday or Friday.
Nevertheless, retirees have been adding comments on websites, Facebook and Twitter denouncing the tentative agreement.
“Retires need to stop their $2 dues and their $3 TAP contributions,” noted one comment on a UAW website. “I hope the UAW/Ford retirees are looking on because you’re next up.”
“The union said that (there are) not enough employees to help the retirees. Bunk. We made concessions for our retirees. Have you all forgotten? The membership has to give like we did,” noted a retiree named John Blackwell, in another post on the UAW website.
In a post on wall on UAW Local 651 in Flint’s Facebook page, Karen Finley Martin said, “Just so you know, there are 100’s of retirees getting ready to cancel their union dues! People are very angry about how the retired members got (treated.)”
Critics of the UAW executive board are also warning that more changes are pending under a letter that calls for further negotiations on pensions between the company and the union.
“GM doesn’t want to fund the pension. It’s a drain on liquidity. And they have a plan to plug the drain,” said Greg Shotwell, a longtime critic of the UAW’s leadership in a message Tuesday widely circulated on the Internet through his website, www.soldiersofsolidarity.org.
“In a letter buried in the pension supplement, which is not distributed to UAW members, the UAW agreed to meet with GM after ratification and amend the pension plan so as to help GM improve its equity and liquidity,” Shotwell noted. “If UAW members ratify the 2011 UAW-GM contract, they grant the union and the company permission to amend the pension plan.”
Just what that means is not clear because it is not spelled out. What is clear is that it is open ended and UAW members, if they ratify the contract, have agreed to go for the ride, said Shotwell.
The letter states: “… the parties agreed that the national parties may mutually agree during the term of this agreement to amend the plan to add retirement options for some or all existing retirees to help GM reduce the volatility and
risk related to the plan and benefit existing retirees by providing an additional voluntary option,” according to Shotwell’s email.
GM has offered no comment on the pension plan, but it appears what the company is proposing is to offer retirees to take out a prorated lump sum from the fund, which they could re-invest on their own.
The company has advanced similar plans in the past, but the union has repeatedly shot them down over the past 15 years, insisting the union members are better off in the fund than trying to reinvest a relatively small lump sum. Source: Joseph Szczesny, For the Daily Tribune.