The Detroit News reports that 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. In addition, the suit claims the agency 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.
“Delphi and its executives were being pressured by the federal government to terminate (its pension plans) as part of an orchestrated effort on the federal government’s part to restructure the auto industry as expediently and cheaply as possible,” the suit said, according to the Detroit News.
On July 22, the PBGC took over the plans effective immediately, with a termination date of July 31 (see Despite All Efforts, Delphi Plans Go to PBGC ), despite a lawsuit filed by the Delphi Salaried Retiree Association in Michigan on July 17 which asked that an independent administrator be appointed to better represent the workers’ interests and that the court temporarily block the transfer of the plan to the PBGC until the issues raised by the case are worked out (see Delphi Retirees Try to Block PBGC Takeover ).
General Motors has vowed to make up the difference for its hourly Delphi retirees whose benefits will be reduced – a condition of its contract with hourly retirees – but has not said the same for salaried retires.
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