Local Delphi retirees face cuts in benefits

Hourly retirees in other areas will receive more benefits than local Packard retirees.

By Don Shilling

Many local retirees stand to receive benefit cuts as a federal agency prepares to take over the Delphi Corp. pension plans.

The Pension Benefit Guaranty Corp. said Wednesday that it is starting the process of taking over the plans, but the process will take several months.

Delphi, which stated previously that it wanted to terminate the plans, said it is waiting for a bankruptcy judge to determine if the action would violate union contracts.

Benefit cuts are pending for many retirees because the PBGC sets limits on pension payouts. Those limits are lower for younger retirees, and many of the 10,000 retirees from area Delphi Packard Electric plants were under 65 when they left.

For example, the maximum benefit for a 65-year-old is $4,500 a month, but that drops to $2,025 for a 55-year-old.

Benefits are lower for those who elect survivor benefits. In addition, certain early-retirement subsidies and supplements are not insured.

Some Delphi retirees are fortunate because they will receive extra payments to make up for the expected cuts, but local Packard retirees are not included.

GM will provide added benefits to United Auto Workers retirees who are Delphi retirees but not those of the International Union of Electrical Workers, which represents local workers.

Tom Wilkinson, a GM spokesman, said those benefits were negotiated in 1999 when GM spun off its automotive-parts unit as a separate company. It was known that the hourly pension plan wasn’t fully funded at the time, he said.

He said those benefits do not extend to IUE retirees because the “new” General Motors that emerged from bankruptcy recently did not take any IUE contracts with it. All GM plants with IUE workers have been closed.

Officials with IUE Local 717 in Warren could not be reached to comment.

Salaried retirees have been trying to fight cuts in health-care benefits and pensions for some time. They have said they stand to have pensions reduced by 30 percent to 70 percent with a PBGC takeover.

“We’re not done fighting,” said Chuck Cunningham of Howland, a former Packard executive who is a leader in the Delphi Salaried Retirees Association.

The group is placing its hopes in a lawsuit that’s been filed in federal court in Michigan, he said. The suit asks that Delphi executives be removed as administrators of the pension plan and an independent overseer be named.

Cunningham said the retirees group hopes that a ruling from the federal court would prevent a takeover by the PBGC.

There are about 1,500 salaried retirees from local Packard operations.

The PBGC said Delphi will continue making monthly pension payments until a takeover is complete. Workers who retire in the meantime also will be eligible for their benefits.

The agency said it is stepping in because Delphi cannot afford to continue making the payments. It said it has been working with Delphi and GM closely since Delphi filed for bankruptcy protection in 2005.

GM had agreed to take over Delphi’s hourly pensions last year but was unable to meet the obligation because of its recent bankruptcy, the PBGC said.

Delphi’s hourly pension plan covers 47,000 participants and has about $3.7 billion in assets and more than $8 billion in liabilities, the agency said. The PBGC expects to be responsible for about $4 billion of the shortfall.

The salaried plan covers about 20,000 workers and retirees and has $2.4 billion in assets and liabilities of $5 billion. The PBGC expects to be responsible for about $2.2 billion of the shortfall.

In addition, the agency will be responsible for a $50 million shortfall in four smaller Delphi plans with 2,000 participants.

shilling@vindy.com

PBGC Pension limits

Monthly payout limits for pension plans taken over by the Pension Benefit Guaranty Corp. this year, with the full benefit and the reduced benefit for retirees who want benefits for a surviving spouse:

Age 65: $4,500/$4,050

Age 64: $4,185/$3,766

Age 63: $3,870/$3,483

Age 62: $3,555/$3,199

Age 61: $3,240/$2,916

Age 60: $2,925/$2,632

Age 59: $2,745/$2,470

Age 58: $2,565/$2,308

Age 57: $2,385/$2,146

Age 56: $2,205/$1,984

Age 55: $2,025/$1,822

Source: PBGC