Congressional Intent Not Followed
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CONGRESS SHOULD RESTORE FULL DELPHI SALARIED PENSIONS
In 1974 Congress passed the ERISA law that requires the Pension Benefit Guaranty Corporation (PBGC) to “encourage the continuation and maintenance of pension plans” AND “to provide for the timely and uninterrupted payments of benefits” 29 USC §1302.
35 years later, in 2009, the PBGC terminated the Delphi Salaried Retirement plan (DSRP) in an unprecedented circumstance that involved the financial affairs of another major U.S. corporation. It was driven by the U.S. Government buying most of the stock of that other corporation. The PBGC ignored its ERISA duties and stopped advocating for the retirees.
- In 2005 the former auto parts maker, Delphi Corporation, filed for bankruptcy. By early 2009, it was successfully working to reorganize. The PBGC was advocating for Delphi retirees -- as it should -- by a) allowing Delphi to make partial payments to the DSRP and b) placing liens on Delphi’s foreign assets to protect the retirees’ interest.
- But in early 2009, the DSRP got caught up in the Obama Administration’s efforts to save General Motors from financial collapse. The Government bought $50 billion in New GM stock as part of a 40-day, Government-led bankruptcy. But GM’s biggest supplier was Delphi, and the Government sought to accelerate Delphi’s emergence from bankruptcy, so the PBGC looked away and denied Delphi retirees up to 70% of their earned pensions!
- The lead Government official under U.S. Treasury said it advocated for the termination of Delphi’s pension plans (Feldman deposition extracts). This would hasten Delphi’s exit from bankruptcy, paving the way for the U.S. to buy New GM.
- Joseph House, the PBGC’s lead official in the matter, admitted in a Federal Court proceeding that the interactions between the PBGC and Treasury were unique (House Deposition excerpts) He separately noted that PBGC representatives invited to a court-ordered mediation of the Delphi bankruptcy instead “sat in a room and read books all day.” Following the mediation, those involved announced a global resolution of the Delphi bankruptcy that involved protecting the full pensions of union-represented Delphi retirees, but not those of salaried retirees. It’s unprecedented for the Executive Branch to be involved in the termination of a pension plan.
- The U.S. Treasury Secretary Geithner had conflicting interests because he was one of the PBGC’s three board members (with its mission to protect retirees). But he also wanted to protect the Government’s $50 billion investment in New GM (which pundits began calling “Government Motors”).
- The lead Government official under U.S. Treasury said it advocated for the termination of Delphi’s pension plans (Feldman deposition extracts). This would hasten Delphi’s exit from bankruptcy, paving the way for the U.S. to buy New GM.
Importantly, the DSRP was historically well-funded and well-managed – unlike other terminated plans that were not.
- It was frozen by Delphi in 2008, and certified to be more than 85% funded in October of 2007 and 2008 (ref. Watson Wyatt certification). And despite the Great Recession, the DSRP’s funded status was above the average of the nation’s 100 largest pension plans (ref. Wells Fargo) in July of 2009.
The Government officials involved tell what happened IN THEIR WORDS …
In a May 29, 2013 court deposition, Joseph House, the senior PBGC official stated that PBGC was still advocating to save Delphi’s pension plans in August 2008 and January 2009: “It’s consistent with the agency’s mission.” (pp 15-16). Mr. House was shown a late February 2009 email chain in which Delphi’s CFO wrote that he understood that U.S. Treasury had direct discussions with PBGC (Mr. House), and that Mr. House had stated that the PBGC’s position was that Delphi pension plans should be subsumed in GM’s pension plans. Mr. House’s response was, “I think that the Delphi CFO’s characterization is basically accurate.” (pp 97-99)
When asked about several potential acquirers of Delphi in April and May 2009, Mr. House said: “I’m familiar with entities with an interest in acquiring Delphi” (pg 38). But in later questioning, when asked if he was aware of any parties that had expressed interest in acquiring Delphi’s assets, Mr. House said the opposite and simply replied “No.” (pg 131)
- When asked: (a) whether the PBGC did anything to persuade Treasury to work towards preserving Delphi pension plans, House said “I don’t have any recollection of trying to persuade Treasury of anything.” (pp 44-45), or (b) whether he or PBGC did anything to persuade Delphi’s bankruptcy lenders to preserve its pension plans, Mr. House answered: “I don’t recall anything like that.” (pg 45)
- When asked "In other transactions that you've been involved with, where a pension plan is in trouble and there is a potential acquirer, does PBGC have communications with a potential acquirer ... have you ever had those sorts of interactions with a potential buyer? House answered, "I think the answer is yes." (pg 133). But when asked, "To your knowledge, no one from PBGC talked to any of these potential (Delphi) buyers," House replied "Not that I'm aware of." (pp 133-134)
- When asked “Has there ever been another situation where Treasury was not only on the (PBGC) board … but was also a key player in the transaction in which PBGC was interested in?” – Mr. House said: “Not that I’m aware of.” Asked, “So this was unique …?” House said “yes.” (pg 122)
In a July 2009 court deposition, the Auto Team’s Matthew Feldman [Feldman deposition] said he was “the lead person at Treasury on (auto industry) pension issues.” (pg 156) and that “In my initial discussions with the PBGC … we were trying to facilitate an agreement where the salaried plan would be … taken over by the PBGC …” (pp 158-59).
A 2013 Report by the Special Inspector General of the TARP Program [SIGTARP 13-003] stated:
- “GM officials told SIGTARP that GM needed PBGC to release liens on Delphi’s assets … According to one General Motors official interviewed by SIGTARP, ‘Ultimately to get Delphi out of bankruptcy, we needed the [pension] plans to be terminated.’” (pp 13-14)
- It’s “Summary/Lessons Learned” section states: “An important lesson Government officials should learn from the Government’s unprecedented TARP intervention into private companies is that the actions and decisions taken must represent the overarching responsibilities the Government owes to the American public.”
The DSRP’s termination was unique. Congress can – and should – restore it!
Government Broke It
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SUPPORT BIPARTISAN LEGISLATION
Our Government Broke a Viable Delphi Salaried Pension Plan (DSRP)
House and Senate bills H.R.1357, H.R.1895, S.1950 call for restoring a pension plan that was wrongfully terminated by the U.S. Government under the Obama administration.
A traditional Pension Benefit Guaranty Corporation (PBGC) pension termination occurs when the PBGC itself initiates the termination of a company’s failed pension plan. This termination was uniquely different.
This Would NOT Be a Bailout of a Troubled Pension Plan
The DSRP was traditionally well-funded and well-managed when terminated by the PBGC in mid-2009. According to a credentialed actuarial firm, it was more than 86% funded 10 months prior to termination. The DSRP’s funding status at that time was no worse than the vast majority of other similar pension plans whose valued assets had also plummeted temporarily because of the 2009 recession.
Restoring This Pension Plan Would NOT Set a Precedent for other Plans
Extraordinary circumstances surrounded the U.S. Government’s 2009 termination of the Delphi Salaried Retirement Plan (DSRP), unlike any other. The Government made an unprecedented decision in 2009 to intervene in the private GM bankruptcy. But GM’s biggest supplier, Delphi Corp., was working through the final steps of its own bankruptcy, so the Government interfered in that, too. After a rushed 40-day bankruptcy, the government’s influence on the PBGC resulted in GM salaried and hourly pensions being protected as well as most Delphi hourly pensions. But it was Delphi salaried retirees who were singled out for pension termination. This termination was uniquely different from every normal pension termination initiated by the PBGC. Government picked winners and losers!
Conclusion: The PBGC didn’t initiate the salaried plan’s termination because it was failing. It yielded to the Administration’s plan to rescue General Motors. Protecting these retirees took a back seat. Please see our “Congressional Intent” document with PBGC testimony showing how ERISA law was not followed, and the PBGC failed to protect retirees.
Sen. Husted Introduces Delphi Salaried Retirees Pension Bill
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Sen. Husted Introduces Senate Bill S.1950.
WASHINGTON – Sens. Jon Husted (R-OH), Kirsten Gillibrand (D-NY), Bernie Moreno (R-OH) and Gary Peters (D-MI) introduced the Susan Muffley Act of 2025. Cosponsoring are Sen. Tammy Baldwin (D-WI), Sen. John Fetterman (D-PA), and Sen. Roger Wicker (R-MS). This bipartisan, bicameral bill would restore the pensions of more than 21,000 Delphi salaried retirees, including approximately 5,180 in Ohio.
“Delphi salaried retirees were robbed of their pensions and the stable retirement they worked hard for throughout their careers. It’s right and fair to ensure these workers—including more than 5,100 Ohioans—receive the pensions they earned,” said Husted.
Spartz Introduces Delphi Retirees Pension Restoration Act
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Rep. Spartz Introduces Additional Bill for Restoration of Delphi Salaried Retirees’ Pensions
March 7, 2025
Congresswoman Victoria Spartz (IN-05) and 13 of her House colleagues introduced bipartisan legislation to fully restore retirement benefits of the Delphi retirees. – H.R.1895.
"This bill restores retirement benefits for thousands of hard-working Americans wronged by the politics of an auto-industry bailout in 2009 with no fiscal impact to the taxpayers," said Spartz."“This issue has not been resolved for too long, and I appreciate the bipartisan support to finally bring justice for so many people around the country."
Susan Muffley Act 2025 Introduced in the House
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Rep. Turner Reintroduces Bill to Restore Delphi Salaried Retirees’ Pensions
February 13, 2025
WASHINGTON, D.C. – Today, Congressman Mike Turner (OH-10) joined representatives Marcy Kaptur (OH-09), Claudia Tenney (NY-24), and Gwen Moore (WI-04) to reintroduce the Susan Muffley Act of 2025 – H.R.1357.
This bipartisan effort is aimed at restoring pensions for over 21,000 Delphi Salaried Retirees, including approximately 5,180 in Ohio. Named in honor of the late wife of a Delphi retiree, the legislation seeks to provide financial relief to those whose pensions were reduced or eliminated following Delphi’s bankruptcy.
“I have remained steadfast in my fight to restore the pensions of Delphi Salaried Retirees,” said Congressman Mike Turner. “While this has been a long time coming, the strong bipartisan support gives us hope that we can finally right this wrong for those who lost their pensions.”