A 17-year pension dispute that could leave taxpayers on the hook for a $1 billion bill may take center stage during President Donald Trump’s visit to General Motors on Monday.
In June, the president asked Congress to restore pensions for Delphi, a former part of General Motors, after over 5,000 employees lost retirement benefits following the company’s bankruptcy. Former Delphi salaried employees have spent nearly two decades lobbying lawmakers to restore their pensions through a proposal that would transfer roughly $1 billion from the U.S. Treasury to the Pension Benefit Guaranty Corporation, which insures thousands of private pension plans across the country.
With Trump formally asking Congress on June 24 to restore the pensions, his visit to General Motors on Monday could add public pressure to revive the nearly two-decade effort. Trump will be speaking at General Motors in Milford, Michigan, at 3:00 p.m.
Attorneys for the salaried workers argue that Delphi’s salaried retirees were unfairly singled out. Hourly union employees at Delphi received their full pensions because General Motors agreed to take on their liabilities under General Motors’ 2009 bankruptcy agreement with the government. However, most salaried employees didn’t have the same protection and they argue that employees who earned similar pensions at the same company should not receive drastically different retirements based on their union status.
When Delphi spun off from General Motors in 1999, GM negotiated agreements with its unions promising to make up any pension benefits not covered by the Pension Benefit Guaranty Corporation if Delphi’s pension plans were terminated. However, because GM was forced by law to negotiate with unions during the spinoff, salaried employees, who were non-union, did not receive those same benefits or negotiations.
Attorneys for the salaried employees argue that when the Obama administration oversaw GM’s bankruptcy in 2009, it approved a restructuring plan that protected the union employees but left the non-union employees behind. Congressman Mike Turner (R-OH) argues that the federal government “picked winners and losers.”
Opponents of the proposal argue that taxpayers should not be responsible for restoring benefits that exceeded the federal pension insurance program’s guarantees. During House debate on the legislation, Rep. Virginia Foxx (R-NC) warned that “more pension bailouts set a damning precedent.”
“By topping up one plan, Congress will be pressured and expected to top up the remaining 5,000 terminated plans and every future terminated plan.” Foxx said, “In case anyone has forgotten, we work for hardworking taxpayers in this country.” She compared topping off the pension plans to handing “out money like candy.”
Congress requires private employers with defined-benefit pension plans, like Delphi, to pay annual insurance premiums to the Pension Benefit Guaranty Corporation in exchange for pension coverage.
Because Congress designed the corporation to insure pensions up to statutory limits, it does not guarantee every pension promise an employer makes, such as the early-retirement supplements that Delphi promised a portion of its employees. As a result, about 5,700 of Delphi’s 20,000 salaried pension participants saw their benefits reduced because their pensions exceeded the Pension Benefit Guaranty Corporation’s maximum guarantee or included early-retirement supplements.
Before Trump prompted Congress in June, Rep. Kristen McDonald Rivet (MI-D) introduced legislation to restore the pensions. The legislation was not passed, leading to Michigan representatives coming together to author legislation to extend health care tax credits for Delphi salaried retirees.
“Through no fault of their own, thousands of Michigan Delphi retirees were robbed of the retirements they earned. They did everything right — worked hard, played by the rules, saved. Now that they are retired, they shouldn’t have to go back to work to afford to see a doctor,” said Rivet.
The legislation was co-authored by Rivet and Michigan Democratic Rep. and current Senate candidate Haley Stevens, Rep. Claudia Tenney (R-NY), and Rep. Turner.
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