House committee criticizes Delphi’s pension termination

December 3, 2009

House committee criticizes Delphi’s pension termination

Congressional panel examines company’s termination of coverage for 70,000 workers

Detroit News Washington Bureau

Washington — A congressional committee on Wednesday blasted the decision of Troy-based auto supplier Delphi Corp. to abandon its pension obligations.

Delphi, which exited bankruptcy Oct. 6 as privately held Delphi Holdings LLP after four years under court-overseen restructuring, turned over its hourly and salaried pension plans to the Pension Benefit Guaranty Corp. in July, saddling the government-owned agency with a $6.7 billion deficit.

The pensions covering more than 70,000 people will result in younger retirees facing cuts as much as 70 percent in their pension and retiree benefits.

The House Education and Labor subcommittee on labor and pensions heard from four members of Congress, two Delphi retirees and a pension expert in the latest Congressional look at the company’s pensions.

"We cannot bail out an industry while leaving thousands of retirees who have loyally served it out in the cold," said U.S. Sen. Sherrod Brown, D-Ohio.

But under the United Auto Workers’ contract, General Motors Co. agreed to "top up" the pensions of United Auto Workers’ hourly Delphi retirees, so they won’t lose benefits. But some smaller unions’ retirees didn’t receive the same benefits.

Salaried retirees will not see any similar benefit. Earlier this year, Delphi canceled salaried health insurance and life insurance for 15,000 Delphi salaried retirees and dependents.

Delphi’s salaried retirees have filed suit seeking to reverse the pension termination.

"This is unacceptable and needs to be fixed," said Rep. Tim Ryan, D-Ohio.

Delphi didn’t offer an immediate comment, but has said previously it regretted the decision to terminate its pension plans, adding that it had no other choice to exit bankruptcy.

Rep. Chris Lee, R-N.Y., said the Obama administration has refused to turn over any documents or explain in detail why salaried retirees were treated differently. Many members "have appealed to GM, Delphi and the administration to intervene and provide fair and equitable treatment for Delphi’s hourly and salaried retirees," Lee said. "At a minimum, these decisions — and how these decisions were reached — ought to be explained sufficiently to these workers."

Charles Cunningham, a Delphi retiree from Warren, Ohio, said he and others "got thrown under the bus."

Cunningham, who spent 28 years at GM and three at Delphi, said salaried retirees "are not looking for special treatment."

Bruce Gump, another Delphi retiree from Warren, Ohio, said the government believed there was no "commercial value" to salaried retirees.

For UAW retirees, the union could have struck GM if it didn’t honor its contractual obligations to its retirees.

"The government decided we deserved no protection," Gump said.

More than five months ago, members wrote to Treasury Secretary Timothy Geithner asking for all records relating to Delphi’s pensions, but they have received no response.

Rep. Michael Turner, R-Ohio, whose father worked for GM for more than 40 years, said Delphi’s bankruptcy has devastated the Dayton area, which also lost a GM plant in nearby Moraine.

"All of these retirees, regardless of labor affiliation or not, worked alongside each other during their careers," Turner said. "They should not be treated differently in their retirement."

A bill in Congress would shift unused stimulus funds to provide health coverage to Delphi salaried retirees, but that bill has little chance of approval.

The PBGC, which recently said it has a $21.1 billion deficit, was formed by Congress in the wake of the failure of the pension plan of the automaker Studebaker.

The agency has seized the pensions of at least five auto suppliers this year, including on Monday the Northville-based wheel maker Hayes Lemmerz International Inc. That pension plan covers nearly 5,000 people and will add another nearly $94 million to the PBGC’s deficit."> (202) 662-8735

© Copyright 2009 The Detroit News. All rights reserved.

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