A long-delayed pension fight returns to Congress
A new federal budget request has reopened a dispute that has followed thousands of former Delphi Corp. employees since the 2009 rescue of General Motors.
The surviving nonunion retirees of Delphi, the Michigan based auto supplier once spun out of GM, have argued for years that they were treated unfairly when the Obama administration steered the automaker through a structured bankruptcy to protect GM and the wider auto industry.
Trump budget request includes $1 billion for PBGC
On Wednesday, June 24, President Donald Trump’s Office of Management and Budget sent House Speaker Mike Johnson, Republican from Louisiana, a supplemental spending request totaling $87.6 billion.
Most of the money was described as funding for military operations in the war against Iran. However, one provision directed $1 billion to the Pension Benefit Guaranty Corporation, the federal agency that insures certain private pension plans and pays partial benefits when plans fail or are terminated.
The request says the money would be used “to increase the benefit levels” for certain Delphi pension participants whose plans were terminated as part of General Motors’ bankruptcy.
Up to 20,000 retirees could be affected
The provision immediately revived hopes among as many as 20,000 nonunion Delphi retirees who say their pensions were cut after the 2009 GM restructuring.
Some retirees have said their benefits were initially reduced by 30% to 70%, creating a financial loss they have spent more than a decade trying to reverse through lobbying, legislation and court challenges.
Union and nonunion workers were treated differently
The anger stems from the way the 2009 rescue was structured. Union retirees at Delphi received support because General Motors had previously promised to back their pension benefits.
That support was also politically important because the United Auto Workers played a key role in the Obama administration’s efforts to stabilize GM and what was then Chrysler.
Nonunion Delphi workers, by contrast, did not receive the same pension protection. Since then, they have argued that the decision left them bearing a disproportionate share of the cost of the auto bailout.
Retirees say the decision was arbitrary
Ron Beeber, a former Delphi lobbyist and board member of the Delphi Salaried Retirees Association, described the retirees’ position in 2021 by saying the decision felt unfair and arbitrary.
He added that many people had summarized the outcome bluntly as, “you guys just got screwed”.
Legal challenges have already failed
The new budget proposal does not guarantee that the retirees will recover their lost benefits. Previous efforts have fallen short.
One legal challenge argued that the PBGC lacked the authority to take over the salaried retirees’ pension plan and reduce benefits, especially because the workers claimed the plan was adequately funded.
The U.S. Court of Appeals for the 6th Circuit rejected that argument, and the U.S. Supreme Court declined to take up the case in 2022.
Political support has not produced a fix
Congress has also considered legislative remedies several times, but none has become law despite bipartisan interest.
Trump and President Joe Biden both signaled support for the retirees at politically sensitive moments, including before the 2020 election, but those gestures did not result in restored pensions.
This latest effort comes ahead of midterm elections, with Republicans facing the possibility of losing control of one or both chambers of Congress while Trump also confronts high inflation and an unpopular war.
Supplemental funding could create pressure
Including Delphi pension restoration in a broader supplemental funding package could make the issue harder for some lawmakers to oppose, especially Democrats from Midwestern states where the auto industry remains politically important.
Still, opponents could argue that the pension language is being attached to war funding as a political maneuver, particularly because broad Democratic support for the military portion of the package appears unlikely.
Old objections remain powerful
The same concerns that stopped earlier proposals are likely to return. Lawmakers may ask why Delphi retirees should receive special treatment when other terminated or troubled pension plans in their districts have also produced benefit cuts.
There will also be questions about whether the federal government should protect pensions in this way and how the restoration would be paid for.
Four years ago, during House debate over a bill introduced by then Representative Dan Kildee, Democrat from Flint, Representative Virginia Foxx, Republican from North Carolina, warned against what she called a pension bailout and said Congress should not “set this kind of precedent”.
House approval once failed in the Senate
That earlier Delphi pension bill passed the House by a vote of 254 to 175. It was then sent to the Senate, where it never received a vote.
The new request gives retirees another opening, but its fate will depend on whether Congress is willing to separate a long running pension dispute from the broader politics of war funding, federal spending and election year strategy.
