By Don Shilling
Pension cuts are slated to start next week as the legal wrangling continues.
A federal pension agency told a judge that it can’t follow his orders to set money aside for Delphi Corp. retirees who are having their pensions cut.
The Pension Benefit Guaranty Corp. said it does not have the legal authority to either put money into escrow or stipulate that it can make retirees whole if they win a lawsuit that challenges the agency’s takeover of the pension plan.
The PBGC response asks Judge Arthur Tarnow of federal district court in Detroit to amend the order that he issued Tuesday.
Judge Tarnow’s order said he would not issue an injunction to stop the cuts if the PBGC set money aside.
The Delphi Salaried Retirees Association asked the court Friday for time to file a response to the PBGC motion. The group filed a proposed motion, however, that says the agency can legally meet the judge’s conditions and asks Judge Tarnow to deny the agency’s motion.
Some of the benefit reductions are slated to take effect next week, and other retirees face cuts in coming months. The association said most salaried retirees face cuts of between 30 percent and 70 percent.
This week’s court filings stem from a lawsuit the association filed that challenges the PBGC’s takeover of Delphi’s pension plan. The suit says the PBGC improperly gave up liens that it held on assets of the auto supplier, which has emerged from a long stay in bankruptcy court.
Under the PBGC, the retirees face benefit cuts because of limits on what the agency can pay and a restriction against paying early- retirement supplements that Delphi issued.
In its court motion, the PBGC said federal law does not allow it to follow the judge’s order.
As for the judge’s first recommendation, there are no provisions that allow the agency to place money in escrow to avoid a preliminary injunction, it said.
The motion also said the agency can’t follow the judge’s other recommendation, which involved stipulating that it would make retirees whole if they win their lawsuit.
The motion said that if the PBGC’s takeover of the pension plan is ruled improper, the plan would revert to “old Delphi,” which was left behind in bankruptcy court to liquidate unwanted assets. Once the plan reverted back to the company, the PBGC would have no authority to pay the retirees any money, the motion said.
It added, however, that “old Delphi” does not have the assets to cover the plan, so the retirees’ pensions would once again be assigned to the PBGC.
Delphi has about 15,000 salaried retirees, including between 1,200 and 1,500 in the Mahoning Valley.
Hourly retirees face similar pension cuts, but General Motors has agreed to cover the amount not being paid by the PBGC.
The salaried retirees have been trying to gain political support in Columbus and Washington, D.C., in an effort to restore their pensions as well as their health-care benefits, which have been reduced.