Judge Says PBGC Must Prove Delphi Plan Properly Terminated

December 23, 2009 (PLANSPONSOR.com) – A federal judge had told the Pension Benefit Guaranty Corporation (PBGC) it must prove it properly terminated the pension plan for Delphi Corp. salaried employees.

U.S. District Judge Arthur J. Tarnow of the U.S. District Court for the Eastern District of Michigan set January 8 as the deadline for the agency to file documents backing its July 31 termination of the plan which helped Delphi leave Chapter 11 bankruptcy, according to the Warren Tribune Chronicle. A group of retirees filed a lawsuit in September claiming the pension insurer violated federal law governing retirement plans because it acted in the best interest of the company and industry rather than participants when requesting the plan terminations (see PBGC Sued by Delphi Retirees).

The retirees also sought a preliminary injunction until the case is resolved to stop the PBGC from reducing their pensions on February 1, but Tarnow didn't grant an injunction, the newspaper said.

The retirees claim in their suit they stand to lose between 30% and 70% of their pension benefits because the PBGC does not cover supplementary benefits such as payments intended to bridge a retiree until Social Security, and because the PBGC caps annual payments to retirees.

Earlier this month, the U.S. House Education and Labor Committee conducted a hearing on the impact of the Delphi bankruptcy on workers' and retirees' pensions and other benefits (see Congress Focuses on Delphi Bankruptcy’s Impact on Workers, Retirees).

Rebecca Moore
editors@plansponsor.com