Bill would restore Delphi pensions
September 8, 2012
Bill would restore Delphi pensions
Senator wants $1B in GM stock sale to go to salaried retirees
By DAVID SHEPARDSON / Detroit News Washington Bureau
An Ohio senator wants to use an estimated $1 billion of the Treasury’s stake in General Motors Co. to restore full pensions to about 20,000 salaried retirees at Delphi Corp.
Delphi is a former GM parts unit, spun off from the automaker in 1999.
U.S. Sen. Sherrod Brown, D-Ohio, said Friday his bill to be introduced next week would transfer the proceeds of the sale of some of the government’s 500 million shares of GM stock to a fund at the U.S. Treasury Department that would supplement payment to the Delphi retirees.
“Many Delphi retirees have yet to receive the pensions they earned and deserve,” Brown said. “Now that General Motors is profitable once again and the federal government is preparing to sell its stake in the company, a portion of the proceeds should be used for those shortchanged retirees.”
Troy-based Delphi, while in bankruptcy in 2009, terminated the pension plans of 70,000 people and left a $7.2 billion shortfall. The Pension Benefit Guaranty Corp., the government’s pension insurer, assumed the plans and must pay $6 billion of the losses.
The Government Accountability Office said in December that retirees will lose an estimated $1 billion or more.
The downside to Brown’s bill is that it would expand taxpayer loses from its $49.5 billion bailout of GM by diverting the proceeds of stock intended to recoup some of the government’s investment.
The Treasury has estimated the government’s $85 billion auto rescue will cost taxpayers $25.1 billion, including about $16 billion for its GM bailout at current stock prices.
Brown’s office didn’t immediately answer questions about the bill, including when the government would be required to sell or how much it would cost to restore full retirement benefits. The Obama administration has delayed the sale of any of its remaining 26.5 percent stake until after the November election.
In 2009, Delphi’s bankruptcy cost 19,000 hourly retirees and 20,000 salaried retirees their full pensions after the PBGC assumed Delphi’s pension plans. Thousands of those retirees live in Michigan, Ohio and New York.
In a move that’s brought harsh criticism from Congress, GM topped up the pensions of most union Delphi hourly workers and retirees, largely those of the United Auto Workers union. It took the action even though it wasn’t legally obligated to do so.
GM did not do the same for Delphi’s 20,000 salaried retirees and pension participants, nor pensions of smaller unions.
Michigan’s two U.S. senators, House Speaker John Boehner and many others in Congress have urged GM to reconsider its decision not to cover Delphi’s salaried.
The pensions of about half of Delphi’s salaried and hourly workers were by the PBGC, as required under the law. The Treasury has insisted it didn’t make the decision to top up hourly Delphi retiree pensions, but that it understood why GM decided to do so. GM has said the agreement will cost $1 billion.
GM told a government audit released in December it made the decisions “because of its dependence” on the UAW.
The Delphi Salaried Retirees Association, a group of salaried retirees that have filed suit to recover their pension benefits, said it appreciates Brown’s support, but would prefer to receivefull pensionsfaster through an administrative action through the PBGC.
GOP presidential nominee Mitt Romney has vowed to investigate the treatment of Delphi salaried retirees if elected.