Union officials: Expect Delphi pensions to sink

Packard workers who retired in 1999 or earlier under GM are not affected by the cuts.

By Don Shilling

Frank Toth of Canfield is shocked that Delphi Packard Electric pensions for him and his wife are about to be cut by more than half.

“I’m probably going to lose my house over this,” said the 59-year old who retired in 2006.

He said he and his wife, Dris, took on a big mortgage when they bought a house in 1996 because they thought their employment and pensions were secure.

Their combined pensions total $6,000 a month, but Toth now fears the payouts are about to be cut to $2,800 a month. Plus, they expect to lose their health care.

“I’m devastated by this,” Toth said.

Pension cuts are coming because the federal Pension Benefit Guaranty Corp. this week started the process to take over the pensions from Delphi, which has been in bankruptcy for four years. A final takeover is several months away.

Union officials said the Toths and thousands of Delphi hourly workers who are under 65 and who retired after Jan. 1, 2000, have reason to be concerned.

In fact, the cuts for these people probably will be worse than Toth expects, said Bob Sutton, an international representative with the International Union of Electrical Workers.

Toth figures he and his wife will lose their pension supplements of about $1,600 a month. The supplements were negotiated benefits that Delphi agreed to pay until retirees reached 62 and became eligible for Social Security.

The PBGC doesn’t pay supplemental benefits, however, so those benefits will be eliminated in a pension takeover, Sutton said.

What many retirees don’t realize, he said, is that their regular pensions can be reduced as well if the retirees are under 65.

The regular pensions, which are about $1,400 to $1,500 a month for recent retirees, could be reduced by hundreds of dollars, he said.

Younger retirees would face larger reductions than those who are closer to 65, he said. The PBGC doesn’t reduce pensions for retirees who are 65 and over, he said.

Karen Krolopp, president of IUE Local 717 in Warren, stressed that it is too early to say what will happen to any specific person. New pension amounts won’t be determined for months.

Krolopp and Sutton said PBGC officials have told them that reductions would be based on how underfunded the plan is, the age of the worker and the level of the pension benefit.

For example, skilled trades workers and production workers received the same total pension benefit, but skilled trades workers had higher regular pensions and lower supplements.

A PBGC spokesman could not be reached.

Union officials say local plants have about 10,000 retirees, but they don’t have a breakdown by age or date of retirement.

Krolopp said those who retired in 1999 or earlier are not affected by the cuts because they were moved to the pension plan of General Motors, which spun off Delphi as an independent company that year.

She wondered, however, whether those pensions will be safe in the future as the automaker and its former parts unit fight for survival.

As an example, she said that GM committed in the past year to picking up pensions for Delphi retirees who left in 2000 or later if Delphi could not afford them. Also, the automaker said it would provide for the health care of Delphi retirees.

GM dropped both of those commitments, however, during its recent bankruptcy.

The PBGC is getting the pensions, and the health care is going to the “old GM,” the entity that was left with closed automotive plants and other assets that were not part of the company that emerged from bankruptcy.

The union officials said they expect few benefits to be provided because of a lack of funds. The IUE and GM officials are negotiating a health-care option, however.

Sutton said company officials have proposed a plan that would include retirees paying $360 a month. It would cover the first $5,000 of out-of-pocket expenses per year and 80 percent of the expenses after that.

Krolopp said she’s been flooded with calls from retirees who are scared that they can’t meet their financial commitments.

“Their contractual rights have been pulled out from under them. They feel betrayed,” she said.

shilling@vindy.com