At last, Delphi retirees see chance to have pensions restored

After 13 years of arguing that their pensions were unfairly cut while the federal government helped protect those of their union colleagues, the salaried retirees of Delphi, the Michigan-based auto supplier, finally got a big win on Wednesday.

The U.S. House voted 254-175 to pass legislation that would require the Pension Benefit Guaranty Corp. (PBGC), the federally chartered insurer of last resort, to pay the retirees lump sum payments for the amounts they lost — plus 6% interest — and whatever benefits they would be owed going forward.

The legislation now goes to the U.S. Senate, where it faces an uncertain path forward but has support, as it did in the House, with some key senators on both sides of the political aisle representing the industrial Midwest. President Joe Biden has also signaled his support.

"These retirees were treated differently than other retirees impacted by the (General Motors) bankruptcy (in 2009)," said U.S. Rep. Dan Kildee, D-Flint Township, who sponsored the bill and led the debate on the House floor on Wednesday. Referring to how Delphi and its employee benefit plans got swept up in the Obama administration's structured bankruptcy that helped save GM and what was then Chrysler more than a decade ago but left the salaried workers behind, Kildee said, "What happened to these retirees was wrong. The last 13 years has been an absolute nightmare for these families."

As part of the cuts to benefits enacted by the PBGC when it took over the salaried retirees' plan as well as those for some other workers not covered by union representation, some workers saw benefits reduced by 30%-70%. Said Kildee, "This is rent, this is food on the table." Restoring the benefits, he said, "is justice."

Delphi, which was GM's Troy-based parts supplier spun off from the company in 1999, filed for bankruptcy a few years later. But before that bankruptcy could be sorted out, in 2008 and 2009, the federal government intervened with billions in aid to GM when it threatened to become insolvent, steering it through a structured bankruptcy to shed much of its debt load.

More: For Delphi's former salaried workers, retirement has been a long fight for fair treatment

More: US Supreme Court declines to hear Delphi retirees' case, ending legal options

As part of that bankruptcy and the restructuring that went along with it, the UAW — whose agreement was needed to keep the company operating — insisted that GM honor its commitments to workers, including those at Delphi, who had been promised by GM that their pensions would be kept whole. GM also needed Delphi's union workers to keep making parts.

As a consequence, when the PBGC took over the pension plans for Delphi's union workers, GM paid to "top up" payments to those workers, ensuring they received all they had been promised.

No such agreement, however, was made for some 20,000 of Delphi's salaried workers, even though they claimed that their own pension plan was adequately financed to cover their benefits. When they argued that the PBGC shouldn't be allowed to terminate their plan without first having their concerns heard, a court determined that federal law left that decision to the PBGC.

It led to 13 years of legal battling and lobbying with Congress. Last year, the U.S. Supreme Court declined to hear their challenge to a lower court ruling denying the employees' claim, leaving legislative action as their only hope.

For the moment, it appears to have paid off — aided, in part, by the political primacy the Midwest has taken in recent presidential elections. In 2020, both then-President Donald Trump and Biden said the employees had been treated unfairly, though neither's administration ultimately did anything about it. Even so, their comments cleared the way for bipartisan support in the House.

"The Obama administration chose winners and losers with taxpayers’ money," said U.S. Rep. Mike Turner, R-Ohio, who, like Kildee, has been championing the employees' cause for years. "These pensions did not fail. These pensioners were robbed of their pensions by people who were supposed to protect them."

Besides Kildee, U.S. Reps. Brenda Lawrence, D-Southfield, and Debbie Dingell, D-Dearborn, also spoke in support of the bill, which would affect some 5,000 retirees living in the state.

While the legislation enjoyed near-unanimous support among Democrats voting, most Republicans voted against it, with U.S. Rep. Virginia Foxx, R-N.C., leading an argument that the bill represents a dangerous precedent that could see Congress asked to prop up other terminated pension plans. The PBGC oversees thousands of such terminated single-employee pension plans.

"We’re considering a bill that would dole our money out like candy," Foxx said. "By topping up one plan, Congress will be pressured to top up the remaining terminated plans and every future terminated plan... We should be protecting taxpayers, not feeding them to the wolves."

She noted that the legislation was estimated to cost hundreds of millions — $850 million over the next five years, according to the nonpartisan Congressional Budget Office — and possibly more in the years after that.

Kildee rejected the claim that this is precedent-setting or that it should lead to other private pension plans being bailed out, noting that these circumstances were unique with the Obama administration's rescue of GM — and the demands put on GM for the funding that went toward it — leading to union employees being made whole and the Delphi salaried retirees being left behind.

"If there is a precedent to be set, the precedent is this," he said. "If the federal government makes a mistake, the federal government has the responsibility to fix it. I don't know what's wrong with that."

Contact Todd Spangler at tspangler@freepress.com. Follow him on Twitter @tsspangler. Read more on Michigan politics and sign up for our elections newsletter.

This article originally appeared on Detroit Free Press: Delphi pensions could be restored at last as US House passes bill