The White House is considering intervening in a dispute between a group of Delphi Corp. retirees and the Pension Benefit Guaranty Corp., according to Rep. Mike Turner, R-Ohio.
A statement on Mr. Turner's website said he and Ohio Gov. Mike DeWine asked President Donald Trump to intervene in the long-running dispute. "The president was receptive to our message of the plight of these retirees," Mr. DeWine.
The PBGC took over the Delphi Salaried Pension 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. Treasury Department officials said at the time the agreement was necessary to help GM emerge from bankruptcy.
Salaried and other workers without union contracts got diminished pension benefits due to PBGC benefit caps.
One group of salaried plan participants sued in U.S. District Court in Detroit in September 2018 challenging the PBGC's takeover of the plan, which at the time of termination in 2009 had $2.5 billion in assets and $4.5 billion in liabilities, according to the PBGC website for the salaried plan.
The retirees lost that case, as well as an appeal of the decision. Ruling Sept. 1, the 6th U.S. Circuit Court of Appeals in Detroit disagreed with the retirees' arguments that the termination first required judicial adjudication, that it violated their due process rights, and that the PBGC's decision was arbitrary and capricious. The appeals court also said the retirees "have not demonstrated that they have a property interest in the full amount of the vested but unfunded benefits."
The appeals court added that its interpretation was supported in other circuits, and that it was inappropriate "to play armchair administrative agency with the benefit of hindsight."
Mr. Turner called the GM rescue a "non-solution," and said the Obama administration unjustly terminated the pension plan."We are looking at every legal option available to remedy this," he said in his statement.
Mr. Turner also cited a report from the special inspector general of the Troubled Asset Relief Program that noted the disparate treatment of Delphi salaried employees, and as much as $440 million in lost pension benefits.
The SIGTARP report made no recommendation after reviewing the Delphi pension issue, but it noted that demands from the United Auto Workers representing the union retirees threatened to stall GM's bankruptcy, while the other retirees had no leverage.
GM was facing default when the government, concerned about the effects on the automaker's supply chain and the U.S. economy, agreed in late 2008 during the presidency of George W. Bush to step in, investing roughly $50 billion in investments and becoming the majority owner with a 61% stake.
President Barack Obama accelerated the process to avert bankruptcy with Steven Rattner, co-founder of private equity firm Quadrangle Group, and Ron Bloom, a former United Steelworkers union adviser and Lazard vice president at the time.
The Delphi pension decision was also made to preserve the PBGC, according to a separate report from the Government Accountability Office in 2010. GAO said losses to GM and Chrysler pension plans could have reached $14.5 billion if the companies didn't return to profitability.