Federal government to provide pensions for Delphi retirees

PERKINS TWP. Bankrupt Delphi can't pick up the tab for its pension plan, and neither will bankrupt G
Tom Jackson
May 24, 2010



Bankrupt Delphi can't pick up the tab for its pension plan, and neither will bankrupt General Motors -- so Uncle Sam is stepping in.

The Pension Benefit Guaranty Corp. announced Wednesday it is taking over responsibility for the pensions of about 70,000 workers and retirees of Delphi. The move could mean smaller pension checks for at least some retirees.

It would affect both hourly union employees and salaried employees.

James Harrington, president of the retiree chapter for United Auto Workers Local 913, said the change could mean pensions for retirees are cut substantially.

"They don't guarantee any supplement to your pension," he said. "They just guarantee a base pension."

Harrington emphasized, however, that he doesn't yet understand how GM could set aside an agreement negotiated with the UAW to take responsibility for Delphi pensions.

He said he is waiting for confirmation from union officials.

"Until I get something from the UAW telling me what the outcome is, I can't say anything about it," he said. "There's a lot of people who are concerned and upset. That would have very bad consequences."

In a statement, GM said it was honoring its agreement with the union by giving the federal pension benefit corporation a $70 million payment and the promise of additional money when Delphi assets are sold.

Perkins Township's former Delphi plant is now owned by Kyklos Bearing International.

Spokesmen for Delphi and for the benefit corporation said Wednesday they don't know how many of the 70,000 affected persons live in Ohio.

"I kind of figured it was coming," said Frank Hodits, a retired salaried employee who lives in Huron.

Hodits said he'll have to learn more to figure out how the changeover might affect him.

The PBGC did not name a date for when it will take over responsibility for the Delphi pensions but said notification letters will be sent out when that occurs. Monthly benefit checks will not be interrupted, federal officials said.

The agency's news release appeared to confirm that at least some retirees are likely to see their pension checks cut.

It said that "certain early retirement subsidies and supplements are generally not insured, and benefit increases made within the past five years may not be fully guaranteed."

Delphi's hourly pension plan covers 47,000 people and has $3.7 billion in assets but more than $8 billion in liabilities, the agency said. The salaried plan covers 20,000 and has $2.4 billion in assets and $5 billion in liabilities.

Delphi, formerly part of General Motors, was spun off as a separate company in 1999. That's when the former Sandusky GM plant, New Departure, became a Delphi plant. When Delphi filed for bankruptcy in 2005, the local plant was sold to KBI. GM was supposed to assume the pension obligations for Delphi's union retirees, but GM itself filed for bankruptcy this year.