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Government takes over Metaldyne pensions

Saturday, August 1, 2009

Government takes over Metaldyne pensions

David Shepardson / Detroit News Washington Bureau

The government’s insurer of pensions took over plans Friday covering more than 10,000 workers and retirees at Metaldyne Corp.

Plymouth-based Metaldyne, which filed for bankruptcy protection in May, is the latest troubled auto supplier to drop its pension obligations, following Troy-based Delphi Corp. which did so last week.

The Pension Benefit Guaranty Corp. said Metaldyne was unable to pay its pension costs and that its plans are seriously underfunded.

The Metaldyne pension plan is about 53 percent funded, with assets of $177 million to cover benefit liabilities of $334 million, according to PBGC estimates. The agency expects to be responsible for $153 million of the $157 million shortfall.

When Delphi terminated its hourly and salaried pension plans, it saddled the PBGC with a $6.2 billion liability.

Vincent Snowbarger, PBGC’s acting director, told The Detroit News in an interview last week that Delphi would not be the last in the auto supplier sector to need a takeover. He said the PBGC has been in talks with several unnamed auto suppliers about assuming their pension plans.

The PBGC is funded through premiums from businesses and funds from pensions taken over. It doesn’t receive any taxpayer money, but many in Congress think taxpayers will eventually have to bail out the PBGC, which has a $33.5 billion deficit.

In May, the PBGC said it was closely monitoring companies in the auto manufacturing and auto supply industries. According to PBGC estimates, auto sector pensions are underfunded by about $77 billion, of which $42 billion would be guaranteed by PBGC.

The PBGC got a boost when General Motors Co. and Chrysler Group LLC agreed to maintain their pension plans after emerging from bankruptcy.

GM also will make payments to hourly Delphi retirees to offset losses they will see in their pension checks once the PBGC completes its take over.

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