General Motors Corp. said Monday that it expects to transfer $16 billion from its internal health-care trusts, in addition to a $2.5 billion cash infusion, to a new United Auto Workers trust in order to fund a new independent voluntary employees' beneficiary association, or VEBA.

The VEBA, seen as a critical element of a new contract between the two parties, effectively will free the auto maker from UAW hourly retiree health-care liabilities permanently, the company said, and the UAW will no longer be able to negotiate such benefits.

Instead, the UAW will manage the trust, allowing GM to cut its own retiree health-care liability to an estimated range of $2 billion to $9 billion by 2013, down from more than $60 billion currently.

The move should deliver an estimated $2.6 billion to $3.4 billion in annual pretax savings, primarily due to changing the plan. GM expects its net UAW hourly health-care balance sheet liability to be about $6 billion to $13 billion in 2010. It currently carries an estimated $47 billion in UAW hourly health-care obligations.

GM outlined some of its financial expectations for the contract in a slide deck posted on its investor Web site in advance of a 9:30 a.m. Eastern conference call. The company also addressed its VEBA contribution in a filing with the Securities and Exchange Commission.

GM shares soared Thursday and Friday, hitting their highest level in three years, amid optimism about the savings that will be realized as a result of the UAW deal. GM shares have gained nearly 50% since early September.

By 2010, GM sees positive VEBA cash-flow, reversing a negative $3.3 billion outflow it currently reports based on retiree health care. It expects to post $3.3 billion in positive cash-flow associated with VEBA-related savings by 2011. Year-end liquidity will fall by $2.6 billion due to an exclusion of short-term VEBA assets it currently accounts for.

Among other savings highlights: the establishment of a second-tier pay and benefits scale for new noncore hires. These people will make an "all-in" compensation -- including benefits -- of $25.65 an hour in 2008, with increases thereafter. GM's "U.S. hourly people cost" will fall to an estimated $10.1 billion in 2007 from $18.4 billion in 2003.

About 65% to 75% of GM current UAW hourly employees will be eligible for retirement during the current contract, which expires in late 2011.