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him as chair of an earlier,
much smaller VEBA trust that
administered dental benefits
to union retirees.

AUTOMOBILE SLUMP
IMPERILED RETIREES
Health benefits — with the
specter of bankruptcy loom-
ing — was a whole different,
larger and more complex
undertaking.
“The auto industry and
the union had a common
problem” in 2007, Naftaly
recalled. “They were worried
about who would pay for the
health care of their workers,
and they were also worried
about the future viability of
the companies” if the auto-
makers became insolvent.
“Workers needed protec-
tion, and everyone needed
to get the liabilities off the
automakers’ books.”
The VEBA trust option
had existed in the U.S. tax
code for decades — though
no company or industry had
ever attempted one as large.
Following federal judicial
approval, the UAW and the
auto industry were handed
an 18-month deadline to
structure the organization,
which today employs 127
people. It was a massive task
at a moment when the auto-
makers’ financial prospects
were growing dimmer by the
day. GM and Chrysler did
file for bankruptcy in 2009
and were reorganized by the
U.S. Treasury; Ford narrowly
avoided it.
“This was a huge mission,
taking on the health care
responsibility for hundreds of
thousands of people,” Naftaly
said. “
Almost like setting up a
new insurance company from a
blank piece of paper. We need-
ed lots of specific expertise.”

Naftaly appor-
tions great credit
to Dan Sherrick,
then the UAW’s
General Counsel,
for writing
the agreement
between the
UAW and the
auto companies,
and to Fran
Parker, who had
recently retired
from HAP and
became the
Trust’s first hire and CEO.
“Dan knew the legal
aspects. I knew finance and
governance. Fran tackled the
job of putting together the
operations team,” Naftaly said.
“From a staff perspective,
the chaos in the economy,
the recession, worked in our
favor. It was a good time to

hire good people with exper-
tise in health care. We hired
actuarial experts, built a
governance structure for the
board. We were juggling a lot
at the same time. We were
being watched. We had to be
ready to serve the retirees and
their families. A lot of people
were depending on us to do
this right. We could not afford
to miss the launch date of Jan.
1, 2010.”
Many retired auto work-
ers, some not yet old enough
for Medicare coverage, were
terrified that they and their
families would be deprived
of health care. Skeptics won-
dered if the VEBA would fly,
given the automakers’ miser-
able financial condition and
the abundance of creditors.
“Once bankruptcy hit,
there was a reluctance by

some to help us complete the
job,” Naftaly said. “Just one
example, the company we
had hired to determine the
eligibility of Trust members
suddenly dropped us before
finishing its work.”
Naftaly had navigated many
financial predicaments over
the years; he knew indecision
wasn’t an option.
The Trust, inaugurated at
the start of 2010, was immedi-
ately responsible for providing
health care to 872,000 eligible
retiree members in all 50
states. The original funding
had to be adjusted due to the
bankruptcy and looked far
less certain than the amounts
originally agreed upon.
During Naftaly’s 12-year
tenure, the Trust’s investments
have prospered thanks in part
to a flourishing stock market
— as of 2019, assets were $60.3
billion — and thanks to the
prudent purchasing of benefits.
The Trust, which operates
totally independently from
the union and automakers,
covers members from retire-
ment through the end of
their lives. Current member-
ship of eligible retirees and
dependents, as expected, has
declined to 594,277. An addi-
tional 67,000 active workers
and their eligible dependents
will have access to Trust cov-
erage when they retire.

FINANCIAL SAVIOR
IN THE MAKING
For Naftaly, who grew up in
Detroit and attended Central
High School, his UAW Retiree
Medical Benefits Trust role
represents the latest highpoint
during a long and distin-
guished career in financial
management, health care and
public service. He can’t say
he always was aimed in this

Fran Parker

Dan
Sherrick

“THEY WERE WORRIED ABOUT
WHO WOULD PAY FOR THE
HEALTH CARE OF THEIR
WORKERS AND THE FUTURE

VIABILITY OF THE AUTOMAKERS.”

— BOB NAFTALY