Another UAW Represented Company Funds a VEBA for Retirees

Daimler Trucks North America has agreed to contribute almost $500 million to a new employee benefit plan in an effort to end a class action lawsuit filed by a group of retirees and the United Auto Workers union accusing the company of illegally cutting their benefits. According to the company, the benefits were not vested and could be terminated. These types of lawsuits are growing in popularity as companies terminate lifetime benefits for retirees when collective bargaining agreements are silent on the issue. Daimler’s half-billion dollar investment will go into a voluntary employees’ beneficiary association (VEBA) trust for the UAW to manage going forward. VEBAs are beneficial for some companies because they cap an employer’s obligation of having to make unknown, future contributions to the healthcare costs of retirees as the number of retirees and the cost of healthcare both dramatically increase each year.