Part of Delphi's emergence from bankruptcy involved shedding millions in pension debt, and while General Motors was contractually obligated to cover the hourly pensions, salaried retirees were left in the hands of the Pension Benefit Guaranty Corporation.
Those pensioners will receive some pension, but they will receive a fraction of what they were previously promised. Congressman Dan Burton (IN-05) is asking for committee hearings into the difference between the two groups of pensioners, a question the Delphi Salaried Retirees Association has been asking for months.
Burton argues in a letter he sent to the House Committee on Government Oversight and Reform that since the American people are a majority owner in GM they deserve an explanation of GM's Decision to take over the hourly pension debt. Burton said "it seems like an odd financial decision for GM."
The following is Rep. Burton's letter (also attached):
October 27, 2009
The Honorable Edolphus Towns
Chairman
House Committee on Oversight and Government Reform
U.S. House of Representatives
2157 Rayburn House Office Building
Washington, D.C. 20515
The Honorable Darrell Issa
Ranking Republican Member
House Committee on Oversight and Government Reform
U.S. House of Representatives
B350A Rayburn House Office Building
Washington, DC 20515
Dear Mr. Chairman and Ranking Member Issa:
I am writing to you to respectfully ask you to convene a Committee hearing to investigate the decision-making process conducted by General Motors (GM), Delphi Corporation, the United States Department of the Treasury and the Presidential Automotive Task Force (PATF) regarding the apparently unequal treatment of Delphi Corporation's hourly versus salaried retirees.
As you may know, Delphi Corporation was spun off from GM in 1999, and the majority of Delphi retirees - hourly and salaried - spent their careers (on average over 25 years) working for GM until being involuntarily moved to Delphi. On October 6, 2009 - after almost four years in bankruptcy - Delphi became a private company following the acquisition of substantially all of its global core businesses by a group of private investors. The buyout was leveraged in part with Federal money channeled from GM. As part of the restructuring agreement worked out by the PATF and the U.S. Treasury Department, GM agreed, in addition to supplying funds for the buyout, to reacquire five Delphi manufacturing plants and "top-up" the pension funds of Delphi's hourly pension plan beyond the amount of benefits expected to be paid to those employees from the Pension Benefit Guarantee Corporation (PBGC), which assumed control of Delphi's pension plans. Delphi's salaried pensioners were offered no supplemental payments. As a result Delphi's 21,000 salaried retirees nationwide are liable to see their pension payments drastically cut, if not eliminated entirely; whereas hourly retirees get everything they were promised.
It seems to me fundamentally unfair that two groups of retirees from the same company, who worked side-by-side for many years, and who are faced with the same unfortunate situation, are being treated so radically differently by the Federal government. It also seems to be an odd financial decision for GM - itself only recently emerged from bankruptcy and dependent on $53 billion in assistance from the U.S. Treasury in order to stay in business - to essentially weaken its own pension fund to help the Delphi hourly workers.
I concede that there may some legitimate reasons, of which I am not aware, for the decision to treat these two groups of retirees differently. GM's stated reason, that it paid top-ups to the hourly (union) retirees because it had promised to do so in 1999, does not seem to hold up. Media reports indicate that initially, GM was going to pay supplements only to Delphi's retirees who belong to the U.A.W., because that was the only union representing the Delphi workers after the bankruptcy. But GM eventually agreed - after an alleged intervention by the Administration - to pay top-ups to retirees represented by the steelworkers' and electrical workers' unions after those two unions protested.
Based on reports I have seen, officials with the PBGC have acknowledged that there is no precedent for the Delphi situation. Therefore in the interests of transparency and accountability, I believe that the workers, retirees and the American people - who are now 60% owners of GM and whose tax dollars will essentially be used to pay these supplemental payments, as well as any funding needed to close the gap in the PBGC's funding because of this situation - deserve a full explanation of this decision from all parties involved. To that end, I respectfully ask the House Committee on Oversight and Government Reform to, as quickly as practicable, convene a hearing so that Members of the Committee may question representatives of the PATF, GM, Delphi, Treasury and the PBGC regarding the disparity between Delphi Corporation's salaried and hourly pensions.
Mr. Chairman, Ranking Member Issa, Delphi's salaried retirees fully understand that the restructuring of America's automotive industry requires shared sacrifices and responsibilities. However, since the salaried retirees have been asked to bear extra burdens to accomplish that goal, they, along with their families, simply seek a full explanation for how this inequitable treatment has come to pass. I do not believe that that is an unreasonable request.
I thank you both for your personal time and attention to this matter.
Sincerely,
Dan Burton
Member of Congress
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MR BUSDRIVER
ASK
'FOREST" GUMP WHAT HIS PENSION IS GOING TO BE? MINE WOULD BE ABOUT $400 A MONTH IF GM DIDN'T TOP OFF MY PBGC. I BET HIS IS GOING TO BE AROUND $4000 TO $5000. . PLUS HE HAS A VEBA FROM THE GOVERNMENT WHICH WE DON'T HAVE, AND THE GOV. IS GIVING THEM AROUND $300 A MONTH TO HELP PAY FOR THIS. GET THE WHOLE STORY INSTEAD OF THE SALARY PEOPLES LIES!!!!
LuLu717
Representative Burton is not well informed, except for the salary position. The HOURLY workers represented were not "whereas hourly retirees get everything they were promised." as Rep. Burton says. We have LOST our health care, which we were also promised, and a "catastrophic plan" is being put in its place..with much higher premiums and deductibles. The salary workers have been given a VEBA thru GM, which they fail to mention, and also hundreds of dollars a month to help pay their premiums for health care. The hourly workers have received NONE of this.
Just get it right...that's all we ask.