STOCKHOLM (AP) -- Allentown Pennsylvania-based truck maker Mack Trucks Inc. has signed an agreement with United Auto Workers union to create an independent trust responsible for the health care of retirees.
Swedish parent company AB Volvo said Monday it will fund the trust with $525 million (euro389 million) in cash, to be paid in equal installments over a five-year period.
The agreement is part of a new collective bargaining agreement and requires approval by United Auto Workers members as well as federal court approval.
The first payment of $110 million (euro82 million) would be made in the second quarter of 2009.
Volvo says the trust would allow continued health care benefits for current and future Mack Trucks retirees while eliminating Mack's health care liabilities.