A group of Ohio legislators is pushing the Pension Benefit Guaranty Corp. to determine the pension benefits for 20,000 former employees of Delphi Corp. after a five-year wait.
The PBGC took over the defined benefit plan in 2009, when Delphi spun off from General Motors Corp. and later filed for bankruptcy. The company emerged from bankruptcy in 2009 as Delphi Automotive LLP, without the pension obligations. During a government bailout, GM agreed to “top up” pension benefits to original levels for workers covered by three union agreements, but salaried and other workers got diminished pension benefits due to PBGC benefit caps.
Sen. Sherrod Brown, D-Ohio, and three Ohio representatives in a letter Tuesday asked Labor Secretary Thomas Perez, one of the agency’s three board members, to intervene. “This delay is unsatisfactory and deeply troubling — contradicting the PBGC’s policy to reach a final determination within 3 years of a plan’s termination,” they wrote, asking for “a clear timetable” from the PBGC and a response from Mr. Perez within a month. Mr. Perez’s office declined to comment.
“Every Delphi retiree is receiving estimated benefits from PBGC, and we’re working diligently to ensure they receive their final benefit determination. Often, in very large cases, like Delphi, there is difficulty in getting the information needed to finalize benefit determinations,” said PBGC spokesman Marc Hopkins.
The agency has had to correct past mistakes in its benefit calculations and has revised its process, which has raised the average time for final benefit determination to four years, up from 3.5 years in fiscal year 2012. That is expected to increase as it tackles older and more complex plans. There are roughly 269,000 people awaiting a final benefit determination. In fiscal year 2013, 95% of the final benefit amounts were within 10% of amounts estimated at the time of termination, according to the PBGC’s annual report.
The Delphi plan, the second largest case in PBGC history, has presented particular challenges. When it assumed the plan in 2009, the PBGC estimated yearly benefits for the salaried Delphi salaried workers under the then-cap of $54,000. Out of 3,303 participants, 1,968 were affected by the agency’s guarantee limit.
Once the PBGC makes a final determination, “the retirees have the right to challenge the determination in court,” said a spokesman for Mr. Brown.