Tags: Delphi | pensions | Turner | union

Rep. Turner: Obama Auto Bailout Only Cut Non-Union Pensions

By    |   Thursday, 09 August 2012 11:13 PM

The Obama administration made a “political” decision to keep the pensions of union-represented Delphi retirees at the expense of 20,000 non-union salaried retirees who worked alongside  them, Rep. Mike Turner of Ohio tells Newsmax in an exclusive interview.

“These are all retirees — and all retirees of Delphi — all of which had contractual pension benefits as a result of their service with Delphi,” Turner charged. “This is an instance where as a result of the auto bailout where the Treasury Department . . . picked winners and losers, and reduced the pension of the salaried retirees.”

Email correspondence between the Treasury Department and the Pension Benefit Guaranty, which assumed responsibility for the Delphi pension plans, revealed that the decision to slash salaried retiree pensions was made solely by Treasury officials, contrary to testimony provided to Congress, according to Turner, who sits on the House Oversight and Government Reform Committee.

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“I believe that clearly [Treasury Secretary Timothy] Geithner was running this program and he was — as the emails indicate — going back and forth to the White House and formulating the ultimate plans. So surely the administration at its highest level was directly involved,” charged Turner, whose committee has already held three hearings on the auto bailout and the decision surrounding the Delphi pensions.

Turner added that the Special Inspector for the Troubled Asset Relief Program (SIGTARP) is also conducting an investigation.

The PBGC agreed to assume responsibility for the pension plans of some 70,000 Delphi workers and retirees as the auto supplier restructured under bankruptcy protection back in 2009. Delphi, which had been operating under bankruptcy protection for nearly four years prior to that time, could not afford to maintain the pensions, and its former parent, General Motors, would not assume them.

“This is a big scandal because I believe that the process was illegal and I think it was done as the administration was punch drunk with TARP money and the power that they had in the auto bailout,” asserted Turner. “In the end, these Delphi salaried retirees lost.”

Delphi's hourly pension plan covered an estimated 47,000 people at the time, with the PBGC assuming responsibility for an estimated $4 billion of the plan's shortfall of nearly $4.4 billion. The company's salaried pension plan covered an additional 20,000 workers and retirees. The PBGC estimated it would be responsible for another $2.2 billion of the $2.6 billion in underfunding for that plan as well as an estimated $50 million in underfunding of four smaller Delphi plans with 2,000 participants.

GM's former parts division was spun off from the Detroit-based automaker in 1999. In September 2008, GM took on about $2.5 billion in liabilities of Delphi's hourly pension plan. A spokesman for Delphi tells Newsmax that “the entire pension issue as it relates to Delphi is with what we refer to as old Delphi” meaning that “the Delphi that exists today — new Delphi — that company, post restructuring, never assumed any of the pension obligations.”

Turner said that union officials are siding with the salaried retirees while a bipartisan group of House members and senators on Thursday sent a letter seeking requests for additional documents from the Treasury Department as well as the PBGC.

“Even the unions have said what happened to the Delphi salaried retirees was wrong. Even the unions have said that everyone’s pensions should have been made whole,” Turner explained. “It clearly is a political move done by political appointees but it just doesn’t make any sense."

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