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Righting a Wrong from 2009!

     Why Support S. 3766 / H.R. 6929 The Susan Muffley Act

 

October 2022

How would
Susan Muffley Act Right the Wrong from 2009?

      Restore Delphi Salaried Retirees’ uniquely terminated pension plan
— Terminated unilaterally due to Auto Team direction

      No taxpayer dollars required in House-passed version

      Reverse dangerous public policy precedents, not set one
— "Leverage" and "commercial necessity" divided retiree groups

      Correct Auto Team errors from 2009, affecting 20,000 retirees

      This bill is a pension recovery, it simply restores the pensions earned by the salaried retirees

Background: General Motors

 

      In 2009, Government formed Auto Team under Treasury

      Pushed General Motors into and through a “quick rinse” bankruptcy

      Used $50 Billion from TARP to buy 61% of “New GM”

      Negotiated government and private agreements

      “New GM” emerged in just 40 days

Background:
Delphi Corporation

      Auto Team needed GM’s largest supplier Delphi to exit bankruptcy

      Auto Team plan: terminate salaried plans, save hourly plans
(Earlier PBGC had negotiated hard for GM to take Delphi plans back)

      PBGC held liens to protect salaried plans exclusively

Background:
Auto Team
takes charge

      Auto Team cut a deal with PBGC to drop liens; PBGC cooperated

      PBGC terminated Delphi’s pension plans in July 2009

      Decision to terminate made by Auto Team, not PBGC
Contrary to PBGC purposes: ERISA 29USC §1302(a)(1)
"to encourage the continuation and maintenance of voluntary private pension plans for the benefit of their participants"

      Hourly plans “topped up,” but not salaried plans

      Decision made by Auto Team, not GM (SIGTARP 13-003 pg. 4)

Auto Team's
impact on Delphi salaried retirees

      Lost up to 70% of retirees' pension benefits

      Further disadvantaged: PBGC misdirected income from sale of liens

      Income from sale of liens was enough to provide full pension benefits today

S.3766 corrects Auto Team, PBGC errors from 2009

      Singled out Salaried retirees for harsh treatment
(Deemed too small and too weak to fight back)

      Misdirected funding from assets and sale of liens
(Assets have grown, income from liens improperly distributed)

2008 – 2009: Impact of
Great Recession
on all pension plans

      Largest pension plans in the U.S. showed a significant decline per Milliman “100” Top Survey. Delphi Salaried at 86% on 10/1/2008

Had PBGC
NOT terminated Salaried Plan
(Terry Group Actuarial Model)

      If $690 million (leverage from liens) had been added to the plan,
it would be fully funded as of end of the most recent plan year

      Assumes plan continued as free-standing up to today

      Assumes plan assets earned market returns 2009 through today

      For perspective, $690 million is only 0.3% of the $250 billion estimated shortfall associated with the largest 100 U.S. pension plans back in 2009
– Prepared by Thomas Terry, CEO, The Terry Group, fully credentialed actuary, past president of the Academy of Actuaries (2014) and the International Actuarial Association (2017)

Conclusion:

      Had PBGC exercised the leverage they held in the liens, the income was more than enough to fully fund the salaried plan without taxpayer money

PBGC’s own math proves our point!

      "PBGC ultimately received proceeds in excess of $700 million from the settlements, which was well in excess of the amount needed to satisfy PBGC's Salaried Plan liens."
https://www.pbgc.gov/wr/large/delphi/delphi-case-history

 

Please  support Susan Muffley Act S. 3766 / H.R. 6929

For more information, contact  DSRAFeedback@gmail.com

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