MEDIA ADVISORY                                                                                             CONTACT: John Donnelly
October 27, 2009                                                                                                      (202) 225-2276

 

Burton Requests Hearing About Delphi Pension Disparity

WASHINGTON, D.C. - Today, Rep. Dan Burton (R-IN-05) formally requested that the House Committee on Oversight and Government Reform convene hearings to investigate the Delphi retiree pensions controversy. While both salaried and hourly retirees are now under the Pension Benefit Guaranty Corporation, the former parent of Delphi, General Motors, has decided to "top-up" the pensions of only hourly retirees to ensure they receive their promised benefits in full. Delphi's 21,000 salaried retirees will not be afforded that same benefit, and, according to a report in the New York Times yesterday, many will suffer a 30% to 70% pension cut as a result. Rep. Burton has requested that all parties involved in determining the present Delphi pension arrangements, including Obama Administration officials, be brought before the Oversight Committee for questioning.

The following is Rep. Burton's letter:

October 27, 2009
The Honorable Edolphus Towns
Chairman
House Committee on Oversight and Government Reform
U.S. House of Representatives
2157 Rayburn House Office Building
Washington, D.C. 20515

The Honorable Darrell Issa
Ranking Republican Member
House Committee on Oversight and Government Reform
U.S. House of Representatives
B350A Rayburn House Office Building
Washington, DC 20515

Dear Mr. Chairman and Ranking Member Issa:

I am writing to you to respectfully ask you to convene a Committee hearing to investigate the decision-making process conducted by General
Motors (GM), Delphi Corporation, the United States Department of the Treasury and the Presidential Automotive Task Force (PATF) regarding the apparently unequal treatment of Delphi Corporation's hourly versus salaried retirees.

As you may know, Delphi Corporation was spun off from GM in 1999, and the majority of Delphi retirees - hourly and salaried - spent their careers (on average over 25 years) working for GM until being involuntarily moved to Delphi. On October 6, 2009 - after almost four years in bankruptcy - Delphi became a private company following the acquisition of substantially all of its global core businesses by a group of private investors. The buyout was leveraged in part with Federal money channeled from GM. As part of the restructuring agreement worked out by the PATF and the U.S. Treasury Department, GM agreed, in  addition to supplying funds for the buyout, to reacquire five Delphi manufacturing plants and "top-up" the pension funds of Delphi's hourly pension plan beyond the amount of benefits expected to be paid to those employees from the Pension Benefit Guarantee Corporation (PBGC), which assumed control of Delphi's pension plans. Delphi's salaried pensioners were offered no supplemental payments. As a result Delphi's 21,000 salaried retirees nationwide are liable to see their pension payments drastically cut, if not eliminated entirely; whereas hourly retirees get everything they were promised.

It seems to me fundamentally unfair that two groups of retirees from the same company, who worked side-by-side for many years, and who are faced
with the same unfortunate situation, are being treated so radically differently by the Federal government. It also seems to be an odd financial decision for GM - itself only recently emerged from bankruptcy and dependent on $53 billion in assistance from the U.S. Treasury in order to stay in business - to essentially weaken its own pension fund to help the Delphi hourly workers.

I concede that there may some legitimate reasons, of which I am not aware, for the decision to treat these two groups of retirees differently. GM's stated reason, that it paid top-ups to the hourly (union) retirees because it had promised to do so in 1999, does not seem to hold up. Media reports indicate that initially, GM was going to pay supplements only to Delphi's retirees who belong to the U.A.W., because that was the only union representing the Delphi workers after the bankruptcy. But GM eventually agreed - after an alleged intervention by the Administration - to pay top-ups to retirees represented by the steelworkers' and electrical workers' unions after those two unions protested.

Based on reports I have seen, officials with the PBGC have acknowledged that there is no precedent for the Delphi situation. Therefore in the interests of transparency and accountability, I believe that the workers, retirees and the American people - who are now 60% owners of GM and whose tax dollars will essentially be used to pay these supplemental payments, as well as any funding needed to close the gap in the PBGC's funding because of this situation - deserve a full explanation of this decision from all parties involved. To that end, I respectfully ask the House Committee on Oversight and Government Reform to, as quickly as practicable, convene a hearing so that Members of the Committee may question representatives of the PATF, GM, Delphi, Treasury and the PBGC regarding the disparity between Delphi Corporation's salaried and hourly pensions.

Mr. Chairman, Ranking Member Issa, Delphi's salaried retirees fully understand that the restructuring of America's automotive industry requires shared sacrifices and responsibilities. However, since the salaried retirees have been asked to bear extra burdens to accomplish that goal, they, along with their families, simply seek a full explanation for how this inequitable treatment has come to pass. I do not believe that that is an unreasonable request.

I thank you both for your personal time and attention to this matter.

Sincerely,
Dan Burton
Member of Congress

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