Delphi Pension Gap Doubles in 2002

January 17, 2003 ( - Automotive supplier Delphi Corp. saw its pension underfunding level almost double last year, the company said.

Delphi said its pension was underfunded by $4.1 billion in 2002 – up from $2.1 billion in 2001, according to a Dow Jones report. The company also trimmed its return on assets assumption rate to 9% for 2003.

Delphi had been upeat in its first signals about its 2003 pension situation last October (See  Delphi Optimistic About Future Pension Funding).  At that time Delphi noted that a low level of benefits-eligible retirees and an average retirement period of only 12 to 15 years contributed to a low cash outflow from the plan. 

This, in combination with a strong operating cash flow, was said to provide flexibility for future funding requirements, Delphi reported at the time.

However, Delphi also admitted in the October statement that its US pension expenses will likely increase in 2003 from levels of about $270 million in 2002. Given current market conditions, the increase could be close to $200 million, the company said.