Delphi retirees file documents in case
By GRACE WYLER
The Delphi Salaried Retirees Association says it has unearthed new evidence in its fight to restore pension benefits.
Delphi retirees saw their pensions cut by 30 percent to 70 percent when their plans were turned over to the Pension Benefit Guaranty Corp., during the federal government’s restructuring of General Motors last year.
The group says the documents show that the PBGC’s involuntary termination of the salaried workers’ pension plans was not justified.
The association has filed the documents to supplement its opposition to PBGC’s summary judgment motion in a Michigan district court.
The first document is a deposition from Matthew Feldman, one of the U.S. Treasury Department representatives on the White House’s Automotive Task Force.
In the deposition, Feldman says the Treasury Department tried to facilitate an agreement between GM and the PBGC in which the salaried plan would be terminated and taken over by the PBGC, and GM would assume the hourly workers’ pension plan.
The Treasury Department concurred with GM’s assessment that the Delphi pension plans were a liability GM could not afford, Feldman said.
“Our mandate from the president is to try to act in a commercially reasonable manner,” Feldman’s testimony said.
Feldman states the PBGC agreed to cooperate with the Treasury Department by not forcing Delphi to go through “an 1113, 1114 process if it didn’t have to.”
Under Sections 1113 and 1114 of the U.S. Bankruptcy Code, the debtor can seek to modify a labor contract or union and nonunion retiree benefits. The modification, or termination, proposals must assure fair and equitable treatment of all parties.
The retirees association argues that the government’s ignoring these processes meant that Delphi salaried retirees were deprived of any due-process protection.
Feldman’s deposition shows “the level of involvement by Task Force and U.S. Treasury in the speed in which the Delphi plan was terminated,” the association said in a press release.
The testimony indicates the federal government chose to expedite the termination of the salaried pensions without proper process in order to ensure GM’s rapid exit from bankruptcy.
The other document is a declaration of Jim DeGrandis, a representative from BPS&M, an actuarial firm hired by the association.
The declaration addresses a discrepancy in assessments of the salaried pension plan’s liabilities.
In October 2008, Delphi’s actuary, Watson Wyatt, determined the pension plan’s liabilities were almost $3.5 billion, and its assets were slightly more than $2.99 billion, according to the declaration. The salaried pension plan was thus considered 85.62 percent funded.
It is unusual for a plan with 85.62 percent funding to require or choose termination, DeGrandis said in his declaration.
“In my experience, plans with much lower [funding] during this time period have continued normal operations,” the declaration said.
But the PBGC, in its January 2009 recommendation for termination, indicates that the plan’s benefit liabilities actually are a 45 percent increase from Watson Wyatt’s assessment.
The PBGC will file a response to the association’s claims later this month, said PBGC spokesman Gary Pastorius. He added that Wyatt assumed that Delphi would “sponsor” the salaried pension plan.
Delphi did not sponsor the plan when it left bankruptcy, which altered the plan’s funding status, Pastorius said.