Updated Aug. 10, 2010
Two federal lawmakers have asked the Government Accountability Office to examine the federal financial assistance provided to General Motors Co. and its treatment of non-union Delphi retirees.
Neither GM nor the Obama administration’s automotive task force ”has provided a full explanation about why some Delphi pension obligations will be met by GM while the salaried retirees are not made whole,” Rep. John Boehner, R-Ohio, said in a joint statement with Sen. Roger Wicker, R-Miss., announcing the request.
“On the surface, the result of the GM bankruptcy proceedings appears to be a union bailout,” Mr. Wicker said in the statement. “While union pension benefits were left intact during these proceedings, other non-union counterparts lost most of their retiree benefits. American taxpayers deserve more openness from the administration regarding how these pension decisions were made and whether union members received preferential treatment.”
Delphi Corp., spun off from GM in 1999, filed for bankruptcy protection in 2005 and had its pension plans terminated in 2009. Delphi emerged from bankruptcy in 2009 as Delphi Automotive LLP, which acquired most of the assets of the old company but not its pension obligations.
GM agreed last year to make good on any difference in payouts to Delphi’s retired hourly union employees due to the Pension Benefit Guaranty Corp.’s ceiling on benefit payments, fulfilling a union agreement from the spinoff of the company.
“In light of the complexity of the process and the role of GM and the U.S. Treasury in the Delphi case, we are concerned that not all Delphi retirees were treated equitably and that the process lacked transparency,” Messrs. Boehner and Wicker wrote in their letter to the GAO. “To assess whether Treasury’s concern for the financial viability of GM may have had an impact on decisions regarding Delphi’s pension plans, we request that Government Accountability Office compare the process for terminating the Delphi pension plans with PBGC’s process for terminating other large, complex plans.”
GM in a statement in response to the request for a GAO study said, “Delphi was established as an independent company, separate and distinct from General Motors Corp. in May 1999, more than 10 years ago. At that time, GM transferred all of the pension assets and liabilities that were associated with salaried employees of Delphi and Delphi divested units. At that time, the newly established Delphi pension plan for salaried employees was fully funded, and responsibility for administering and managing that pension plan from that point forward rested solely with Delphi’s leadership and advisors.
“We appreciate how difficult it is for Delphi salaried employees and retirees to have their pension plan taken over by the PBGC. However, the new General Motors Co. is not in a position to fund these pension liabilities a second time.
“Unlike the situation with the salaried pension plan, the Delphi hourly pension plan was not fully funded when Delphi became an independent company. Accordingly, and as part of required effects bargaining, GM committed to the UAW that GM would guarantee the level of hourly pension benefits in the event the Delphi hourly pension plan became frozen or terminated.”
Chuck Young, GAO managing director, public affairs, said, “It usually takes a few weeks for us to review the request and make a determination.”
Lindsey Williams, Delphi Automotive director-corporate communications, said the new company isn’t party to any discussions involving the pension plans because it didn’t assume any of those obligations.
