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These notes summarize the material covered during the Salaried Retirees Business Meeting held in Sterling Heights Michigan on Oct. 19, 2006. Lansing retirees were represented by John Powers, John Fox, Bob Fedor, & John Bond.

Notes from GM Salaried Retirees Business Meeting
Oct. 19, 2006

The summary below reflects my understanding of the material presented at the above meeting and may not be 100% accurate or contain all of the information presented. My note taking capability has somewhat deteriorated in the last few years.
John E. Bond

General Notes on State of the Business

1. Corp is working on improving communications with retirees in various ways. The Business Meeting was an excellent example of what can be done if they work on direct contact with the retirees. The meeting was well organized and contained a great deal of useful information with a minimum of commercial content.

2. Rick Wagoner gave an excellent, very candid presentation on the state of the business including some comments on the recent Renault/Nissan discussions the upcoming UAW negotiations and the overall state of the business. An interesting sidelight on the state of the business is that with all of the bad news about GM’s declining market share, non U.S. sales are doing very well. Overseas sales have exceeded U. S. sales for the first time ever.

3. Comments on changes in marketing strategy by the head of NA marketing. He talked about programs to establish distinct “brand identity” with a clear pricing range for each brand with less reliance on incentives. We have heard this expressed before, but have not seen much in the way of concrete results. He also talked marketing programs to improve sales on the two coasts where GM is relatively weak. Some pretty good ads for some of the new crossover products (Acadia, Outlook, & Enclave) were shown along with some new Silverado ads.

4. Marketing is also working on some new version of the Ambassador/GM in the Driveway Program, but no details were available.

5. Plans are being developed to send a CD Power Point presentation and a VHS for video presentation to all meeting attendees. Staff was not sure that this material would be available prior to the close of health care enrollment.

Note: The above material was received from the Corp on 10/25/06 and was shown to the 3rd Wednesday Luncheon Group on 10/26/06.

6. GM is planning a series of (4) presentations in Lansing to cover some on the health care issues covered at the meeting. John Powers has some preliminary information on these meetings.

1. Pension funds (both Hourly and Salaried) are currently over funded. Salaried by 3.3 B and Hourly by 7 B

3. Corp is making changes to the pension program for all active salaried employees, freezing contributions to Part B, going back to 50% Corp contributions to 401k, etc.

1. In general, all GM coverage of retirees by HMOs is being discontinued in 2007.

2. In cases where the retiree’s HMO is no longer available (this include almost everyone) a replacement plan for most people will be the Enhanced PPO with an monthly premium and an out of pocket annual deductible.

3. In cases where the retiree has other private health insurance (other than Medicare), the HSA PPO Plan A is well worth investigating. In the central Michigan area the HSA PPO plan is administered by United Health Care and normally does not pay for very much. Most of a retiree’s health care costs will be paid for by Medicare and the other private health insurance. The material in the enrollment booklet is confusing on this issue as it states in several places that this option is not available to Medicare enrollees. On page 7 there are clarifying statements indicating that Medicare enrollees can select this plan, but cannot open a Health Savings Account which is like a 401k for health care. At the meeting we were wondering why the HSA option was listed on the individual sheet when it apparently was not available to Medicare enrollees. This question was not adequately addressed in the meeting, but some subsequent investigation with the help of Bob Kapp and Cheryl Brooks have clarified this issue.

Retirees who may fit into this situation are those whose spouse/partner are employed by or retired from MSU, State government, U. S. Military forces, etc

1. GM recognizes that this is a very complex issue and is working developing ways to better communicate the potential impact of the planned changes to the Salaried retirees. As explained in the booklet, the base line will be established by GM's 2006 costs (the 2007 plan structure reflects current estimates of the cost shifting) and future cost increases to the Corp will be shifted to the retirees by a variety of methods.

2. Some of the cost shifting changes reflected in the 2007 enrollment material include: increased medical co-pays, revised prescription co-pays, eliminations of HMOs and shifting retirees to the Enhanced PPO plan, offering Health Savings plans, changes in the dental plan, etc. GM’s current estimate is that these changes will result in a cost shift to the retiree of approximately $375.00in 2007. If GM’s 2007 cost experience requires, there may be additional plan changes made mid-year.

3. GM spends about $5.3 B/year on health care cost and is basically self insured in this area. These expenses break down to $1.3 B for HMO coverage, #2 B for PPO coverage, $1.5 B for prescription drugs, and $.5 B for misc. administrative, etc. About $ 550 M of this total is spent on Salaried retiree costs.

This cost breakdown times the number of retirees will determine how the $550 M is allocated. About 80% of current retirees are in the Medicare categories, however the structure will be adjusted in the future as the demographics change.

4. A pilot program specifically designed for a combination of HSA accounts and Medicare is in the process of development and more information may be available late next year.

5. Current employees hired after 1-1-93? will have no Corp health insurance in retirement. About 38% of current Salaried actives will have no GM health insurance in retirement There are still about 26,000 active Salaried employees who will qualify for retirement health insurance in the future.

6. GM has negotiated some health care cost changes with the UAW. The current agreement reached in June 2006 apparently calls for the Hourly to give up the COLA and annual “Xmas” bonus to help pay for GM’s cost increases in health care and there will be additional negotiations on this issue during the 2007 contract talks.

7. GM anticipates that over-all health care cost will continue to until about 2018 when cost shifting, cost containment programs, and demographics will start to influence the trend.

8. A question was asked at the meeting as to why enrollment in a GM health plan is required to qualify for ECC coverage. It was stated that this issue was being studied and might change in the future.

9. A question was asked at the meeting about changes in prescription drugs where the retiree was changing plans. This question was not completely answered and would depend on which plan the retiree will be changing to for 2007. The safest approach would seem to be to get and new prescription for all your medications from your current physician prior to the first of the year so that you would have it available for your new prescription drug insurance carrier.

1. Company paid basic life insurance policy will drop to 50% of its base value on 1-1-2017

2. Important to keep beneficiary information up-to-date to reflect current circumstances. Can do on line very easily or get form by mail to record changes.

4. Use same PIN with all Fidelity account access. Can establish a PIN on line or by phone.

5. You can check on practically all personal GM info on line atincluding pension, SSPP, health care, etc.

6. In this connection, Ford is currently in the process of making even larger changes in their life insurance program and Daimler/Chrysler is considering eliminating their program completely.