July 22, 2014 at 5:06 pm

Judge orders PBGC to turn over documents in Delphi pension suit

Washington — A Republican senator on Tuesday praised a ruling by a federal judge that ordered the government’s pension insurer to disclose more documents related to its decision to absorb the salaried pension plans at Delphi Corp in bankruptcy.

It’s the second win in two months by 20,000 salaried retirees who worked at the auto supplier to force the government to turn over documents.

Late Monday, U.S. District Court Judge Arthur Tarnow in Detroit ruled the Pension Benefit Guaranty Corp. — the government-owned pension insurer — waived its legal privilege to withhold important documents detailing how it handled the termination of the pension plans of Delphi salaried retirees.

“I have long supported the 5,000 Delphi salaried retirees in Ohio in their quest to receive the pensions and benefits that they rightfully earned through years of hard work.” said Sen. Rob Portman, R-Ohio. “I am very hopeful that today’s ruling is a step toward regaining their financial security and bringing this matter to a long-overdue, fair and equitable resolution.”

PBGC spokesman Marc Hopkins said, “PBGC is reviewing Judge Tarnow’s ruling and appropriate responses to it.”

In June, U.S. District Judge Emmet Sullivan in Washington ordered the Treasury Department to turn over documents related to the role of President Barack Obama’s auto task force in 2009 in the decision of Delphi to terminate pension plans of salaried workers. Sullivan also said Treasury must explore whether it can compel two former members of the auto task force, Matthew Feldman and Harry Wilson, to answer questions about their role in Delphi’s financial issues.

Delphi pension retirees from the Troy-based parts unit that was spun off by General Motors Co. in 1999 have been battling for more than 4½ years over lost pension benefits. They have spent millions in legal fees trying to get access to the documents.

One of the key issues is the amount of liabilities of the salaried pension plan before they were terminated. Delphi retirees cite a 2009 independent actuary that said the liabilities were $3.5 billion, while the PBGC said it was $5.2 billion. Retirees want the documents to try to understand how the PBGC arrived at the higher calculation.

Some 20,000 salaried retirees and future retirees at Delphi lost pensions and health and life insurance benefits.

Delphi, while in bankruptcy in 2009, terminated the pension plans of 70,000 people and left a $7.2 billion shortfall. The PBGC assumed the plans and must pay $6 billion of the losses.

PBGC recovered about $650 million from Delphi, meaning its net losses from taking over the pension plans is about $5.3 billion.

The supplier’s pension termination is the second-largest loss to PBGC in its history, behind only United Airlines’ pension shortfall of $7.4 billion in 2005.

In a move that has brought harsh criticism from some in Congress, GM “topped up” the pensions of most union Delphi hourly workers and retirees, primarily those from the United Auto Workers union, but didn’t do the same for salaried retirees. It took the action even though it wasn’t legally obligated to do so.

GM told a government audit released in December 2011 it made the decisions “because of its dependence” on the UAW.

GM did not do the same for Delphi’s salaried retirees. The automaker also didn’t agree to top up the pensions of smaller unions.

Some retirees will lose up to 65 percent of benefits. Salaried retirees are expected to lose an estimated $400 million, PBGC has said. The federal government allowed GM to use nearly $3 billion of taxpayer funds to help Delphi exit from bankruptcy and let GM reacquire part of its former parts unit, which it has since resold.

Tarnow in September 2011 dismissed claims brought by Delphi retirees against the Treasury Department, Secretary Timothy Geithner, the auto task force and former auto advisers Steven Rattner and Ron Bloom.

Last week, members of Congress members asked U.S. Secretary Thomas Perez to intervene and require the government’s pension insurer to quickly make determinations on the value of pensions for 20,000 Delphi Corp. salaried retirees.

U.S. Sen. Sherrod Brown, D-Ohio; Debbie Stabenow, D-Lansing; Charles Schumer, D-New York; and Bob Casey, D-Pennsylvania, along with Ohio U.S. Reps. Marcia Fudge, Marcy Kaptur and Tim Ryan asked Perez to ensure the Pension Benefit Guarantee Corporation makes a final determination by the end of the year. The members said without action, PBGC might not complete the analysis until 2016.

In June, Portman, House Speaker John Boehner, and the entire Ohio Republican Delegation asked the Office of Inspector General conduct an inquiry into the PBGC’s lengthy delay in providing final benefit determinations for Delphi salaried retirees. Portman noted that the Delphi pension cuts impact about 5,000 Ohio residents and the families.