“There definitely has been a turning point,” said Washington Twp. resident Tom Rose, who spent 30 years working for General Motors and nine years working for Delphi, the parts-producing company GM spun off in 1999.
“It’s been an accumulation,” said Thomas Green, former manager of what was once Delphi’s Needmore Road brakes plant.
But some observers aren’t convinced yet the retirees will ultimately succeed.
“I’m not super optimistic, but there are times when appeals to corporate conscience can have some impact,” said Norman Stein, a Drexel University law professor.
Under the terms of the federal auto bailout that helped lead GM exit bankruptcy in 2009. Delphi relinquished its pension obligations to the Pension Benefit Guaranty Corp., which subsequently cut the pensions of Delphi workers from 30 to 70 percent. While GM paid the difference between lower PBGC payments and prescribed pension amounts for union retirees, non-union workers benefited from no such “topping off.”
The salaried retirees don’t begrudge their union counterparts their full pensions. But they question the legality of GM making such a payment after bankruptcy. And they want their own full pensions.
There are 821 local members of the Delphi Salaried Retirees Association. With about three times the people in the pension plan as are in DSRA, Rose estimates there are roughly 2,000 affected local retirees.
Nationally, more than 20,000 salaried retirees are dealing with lower pensions.
Their fight is being waged on at least three fronts — in Congress, in court and in the arena of public opinion. U.S. Rep. Mike Turner, R-Centerville, was an early ally. But at last count, at least three U.S. House committees are investigating how Delphi pensions were treated. And since September 2009, DSRA members have been suing the PBGC in federal court in Detroit for restoration of their pensions.
“When you’re right, you don’t give up,” Rose said.
The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) launched its own investigation, but in a May letter said it “cannot complete its work because three former Auto Task Force members … have refused to meet with SIGTARP and provide information and answers to questions concerning the role they played with respect to this decision.”
“SIGTARP finally got the feeling of what it’s like to be stonewalled,” Rose said.
Dave Cole, chairman emeritus of the Center for Automotive Research in Michigan, said he strong feelings generated by the issue are justified.
“Everybody forgot about the salaried workers,” Cole said.
Cole feels it would have made more sense for those overseeing the disposition of pensions — from Delphi to the PBGC to the former Presidential Task Force on the Auto Industry — to include salaried retirees in the restoration of retiree pensions.
“No question about it. This should have been dealt with outside politics,” Cole said.
He thinks there will be a resolution in the matter, but it may depend on who wins the presidential election on Nov. 6. Cole said GOP nominee Mitt Romney has complained of the treatment bondholders received versus labor in the resolution of the GM and Chrysler bankruptcies. If elected president, Romney can be expected to pursue different priorities, Cole said.
Karen Friedman, executive vice president and policy director of the Pension Rights Center — a Washington, D.C.-based organization that calls itself the nation’s only consumer organization dedicated to protecting pensions — feels the Delphi salaried retirees have been able to draw an unusual amount of attention to their cause — and that’s to their credit, she said.
“It’s good for the (Delphi salaried) retirees for doing this,” Friedman said. “Other retirees should follow suit.”
But she also feels that their case underlines the importance of the PBGC and its role in protecting at least some portion of imperiled private-sector defined pension benefits. Without the PBGC and the Employee Retirement Income Security Act of 1974 that created it, Delphi retirees would be receiving nothing, she said. The PBGC collects insurance premiums from private employers and receives pension funds from the pension plans it takes over.
Stein thinks the salaried retirees have a solid moral argument and “some pretty influential people” on their side. He believes the salaried retirees’ strongest argument is that they were treated poorly. Their “sole crime” was believing they would be paid what Delphi promised it would pay them, he said.
This situation can easily recur with other companies in similar circumstances, Stein said. It’s worth considering whether there should be stronger legal protections in place to prevent similar problems in the future, he said.
“You’re always better off having the law clearly on your side, rather than having the angels clearly on your side,” he quipped, before adding more seriously: “I really do think the angels are on their side. They deserve to get what they’re fighting for.”
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