Delphi Retirees May Get Pensions Back

Salaried retirees from the old Delphi Corp., many of whom started their careers with General Motors could have their pensions restored.

The retirees had their pensions transferred to the federal Pension Benefit Guaranty Corp., or PBGC, during Delphi’s bankruptcy. The PBGC, as the law dictated, cut the pensions to an amount allowed the federal statute.

The salaried pensioners lost thousands of dollars in the cuts, triggering a 13-year legal fight that went to the U.S. Supreme Court, which rejected the claims of Delphi retirees.

The pensions of Delphi hourly workers were protected through negotiations between the UAW and the Obama administration. The pensions of the GM hourly and salaried employees were al also protected during the structured bankruptcy.

Change in the wind

However, this week the U.S House of Representatives voted 254 to 175 for special legislation to pay the Delphi retirees a lump sum plus 6% interest, which will partially restored money lost when the pensions were transferred to the PBGC.

The bill now faces an uncertain future in the U.S Senate where one member has the power to block passage with a filibuster that requires 60 vote to undo. However, if it passes the Senate and makes to President Joe Biden’s desk, he’s signaled he’ll sign it.

Representative Dan Kildee (D-Michigan), one of the principal sponsors, said, “These retirees were treated differently than other retirees impacted by the GM bankruptcy.”

Different how?

When the white collar pensions were shifted to the agency, many saw their benefits cut by 30%-70%. Delphi, which was spun off from the company in 1999 by GM, filed for bankruptcy a few years later. Before the parts supplier’s bankruptcy was completed, GM — with government intervention — went through bankruptcy in 2008 and 2009.

The UAW pushed all involved to ensure GM met its obligations to its workers, including those at Delphi. If not, the union would’ve made certain the automaker wouldn’t be able to produce a vehicle as there would be no workers to manufacture parts or cars.

GM agreed to make up the difference between what the PBGC would pay and what the union workers agreed to in their contracts. However, no provision was made for the nearly 20,000 salaried workers at Delphi, which led to a lawsuit. Ultimately it was found the PBGC could made decisions about the salaried workers pensions without input from them. It went all the way to the U.S. Supreme Court, which found against the Delphi workers.