The Canadian Auto Workers union says a new trust to be funded with $2.5 billion from General Motors of Canada will take over responsibility for paying supplementary health benefits for 32,000 retired employees of the auto maker.

The fund, called the Auto Sector Retiree Health Care Trust, was negotiated when General Motors restructured in 2009 under court protection from bankruptcy. The fund recently received approval from the Ontario Court of Justice.

"This represents the final step in the restructuring of GM Canada, and now we can move forward with focusing on ensuring GM's future success and presence in Canada," CAW president Ken Lewenza said Tuesday in a statement.

The company will initially provide about $1 billion to the trust, and a total of $2.5 billion over the next seven years.

Covers prescription drugs, dental and vision care

Those funds, plus investment income earned on the trust's assets, will be used to pay for supplementary health benefits such as prescription drugs, dental care and vision care. Those costs had previously been borne by the company.

"While the HCT system is not perfect, it provides our retirees with a level of security for future benefits that is far preferable to the previous system," Lewenza said. "Without the HCT, if a company goes bankrupt, retiree health benefits are lost completely. Now we have money in the bank to ensure at least partial payment of benefits no matter what."

A similar system has been in place for retired employees of Chrysler Canada since the beginning of this year.

The creation of the trust fund was a condition of the $10.8 billion contribution the federal and Ontario governments made to the bailout of GM Canada's parent company, General Motors Co.