Pension Gains for Current, Future Retirees

Your UAW bargaining team resisted persistent proposals from General Motors for radical changes in our pension plan and succeeded in negotiating significant improvements.

The corporation pursued numerous takeaways such as: freezing all credited service, imposing new restrictions on early retirements, and eliminating the Social Security age-creep patch which replaces the benefits lost due to the gradual increase in the Social Security normal retirement age.

Your bargaining team forged an agreement that provides significant benefit increases for current and future retirees.

Interim Supplement

The interim supplement is paid to retirees who retire prior to their Social Security 80 percent date and who have fewer than 30 years of credited service. This benefit is paid until that date in addition to the basic benefit described above, but is reduced for early retirement. The amount per month per year of credited service, under the current agreement, payable at retirement ages 60 and 61, is $47.30. The corresponding amounts negotiated under the proposed agreement are $48.25, effective Oct. 1, 2007; $48.45, effective Oct. 1, 2008; $48.65, effective Oct.1, 2009; and $48.85, effective Oct. 1, 2010. Reduced amounts will be paid for retirees at younger ages.

Retirements Under the New Contract

Basic Benefit Rate

The basic benefit rate is increased in each year of the proposed four-year agreement. These increases will total $2.65 per month per year of credited service by the final year of the agreement. The increases will be effective Oct. 1 of each year of the agreement.

Insurance Overpayments

Beginning Oct. 1, 2007, retirees who have an outstanding overpayment under the Life and Disability Benefits Program will have their basic benefit rate increases reduced by 50 percent until their debt is repaid.

Temporary Benefit

The temporary benefit is paid to retirees who qualify for either a total and permanent disability retirement and are not eligible for a Social Security disability income benefit, or for a mutually satisfactory retirement, and in either case have not reached their Social Security 80 percent date. This benefit is paid until that date in addition to the basic benefit described above, unreduced for early retirement. The proposed temporary benefits are shown below:

30-and-Out Supplement

The 30-and-out benefits will be increased $150 for workers who retire before their Social Security 80 percent date during the term of the agreement. This will increase the 30-and-out income from the current $3,020 to $3,170 per month in the fourth year of the agreement. The 30-and-out monthly benefits for workers who retire under the proposed agreement are displayed below:

Current Retirees

Basic Benefit and 30-and-Out Supplement

The UAW has once again remembered our retirees and surviving spouses who retired prior to Oct.1, 2007. In this proposed agreement, the basic benefit rate has been increased by $2 per month per year of credited service. Those retirees receiving a 30-and-out supplement will receive a $120 increase in the total amount payable to them, inclusive of the basic benefit rate increase. All increases are effective Oct. 1, 2007.

Temporary Benefit and Interim Supplement

Retirees receiving a temporary benefit will receive an increase of $1 per month per year of credited service, to a maximum of $30 per month. Retirees receiving an interim supplement will receive an increase of 95 cents per month per year of credited service, reduced if retirement was before age 60. These will be paid in addition to the increased basic benefit.

Retiree Lump-Sum Bonus

UAW GM retirees and surviving spouses, whose benefit started before Oct. 1, 2007, will receive four lump-sum payments during the proposed 2007-2011 agreement. The payment for December 2007 will be $700 for all retirees and $455 for all surviving spouses. The lump-sum payments to be made in December 2008, December 2009 and December 2010 will be $23.33  times years of credited service, with a minimum of $233.33 and a maximum of $700. Surviving spouses will receive 65 percent of the retiree amount. Examples are as follows:

Special Survivor Option

Benefits under the special survivor option will be increased to $14.10 per month per year of credited service, effective Oct.1, 2007.

Delphi "Gap" Issues Resolved

Your bargaining team was determined to further protect former GM workers impacted by the Delphi spin-off. As a result, under this proposed agreement these workers, both active and retired, will receive the same pension increases, pension lump sums, and Social Security "creep" benefits as similar GM workers.

Improving Participation and Performance in the Personal Savings Plan (PSP)

As a result of recent federal legislation and in an effort to boost members’ retirement savings, a new automatic enrollment program will become effective July 1, 2008, or as soon as practicable thereafter. This program will apply to future hires and members who currently do not participate in the savings plan.

Under the auto-enrollment program, 3 percent of eligible weekly earnings will be deducted from pay and contributed into a default fund if a different investment choice is not selected. Members who do not want to participate in a Personal Savings Plan (PSP) will be able to opt out of the program within the 90-day advance notice and election period.

The default funds are life-cycle funds, designed to be growth-oriented at younger ages and protective of assets at ages approaching retirement. Per current PSP rules, members in the program can change investment selections and contribution percentages at any time. Auto-enrollment programs have been successfully implemented at a number of companies and can enhance the PSP as a valued supplement to our pension plan.

In addition, it is well-known that small differences in funds’ fees and expenses can have a dramatic effect on investment returns over the course of a working career. Accordingly, the UAW and the corporation agreed to jointly select an independent consultant in 2009 to evaluate the fees and expenses charged to members, as well as the performance of all funds in the PSP.

New Investment Option

The proposed agreement adds the Ariel Fund (a Mid Cap Blend Fund) as an additional investment choice for our members.

Phased Retirement Study

The Pension Protection Act of 2006 liberalized provisions relating to workers’ eligibility for phased retirement, an option whereby a worker can transition to retirement by gradually reducing worktime and gradually increasing retirement time. The UAW and the corporation agreed to study the feasibility of offering a phased retirement program on a pilot basis.

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