Benefits February 8, 2023

Delphi Pension Restoration Bill is Reintroduced

Bipartisan measure would restore pensions to more than 20,000 retirees and provide back pay for benefits that were cut. 

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A bipartisan group of U.S. representatives has reintroduced legislation to restore the pensions of more than 20,000 retirees of former General Motors unit Delphi. The bill aims to provide back pay for pension payments to retirees of the auto-parts maker, which was created as a spin-off of GM in 1999 but filed for bankruptcy protection in 2005.

The proposed legislation is backed by Representatives Dan Kildee, D-Michigan, Mike Turner, R-Ohio, Claudia Tenney, R-New York, and Gwen Moore, D-Wisconsin. The states with the most Delphi retirees are Michigan, Ohio, Indiana and New York.

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The bill’s supporters say the back pay will cover pension payments the retirees should have been receiving for the past 13 years via a lump-sum payment equal to the difference between the benefits that have been paid out and what retirees would have been paid without limitation—plus 6% interest. The bill would also restore full pension payments going forward.

In 2008, GM assumed responsibility for some of the Delphi hourly pension plan and was expected to take back the entire plan. However, during the financial crisis of 2009, GM filed for bankruptcy and said it could not afford to take on Delphi’s pensions.

A group of 21,000 Delphi salaried employees who worked at the company’s Dayton, Ohio, plant had been covered by a single-employer pension; however, GM closed the plant and voluntarily terminated the fully funded pension of the salaried employees. Later that year, the Pension Benefit Guaranty Corporation assumed responsibility for Delphi’s six pension plans that, at the time, covered 70,000 workers and retirees, while the group of 21,000 Dayton workers formed the Delphi Salaried Retirees Association.

Last year, Kildee introduced the Susan Muffley Act, which passed in the House but never came before a full vote in the Senate after Republicans voted against a request for unanimous consent, which could have fast-tracked the bill. It is named after a deceased member of the Delphi Salaried Retirees Association, Susan Muffley, who was married to a Delphi retiree.

“Delphi salaried retirees lost their pensions through no fault of their own, and that’s not right,” Kildee said in a statement. “These hardworking retirees have waited for over a decade for the benefits they earned. We will not stop fighting for Delphi salaried retirees until their pensions are restored.” 

Bruce Gump, chairman of the retirees’ association, lauded the bill but noted that the plans’ retirees who passed away since 2009 never received their full benefits.

“In nearly 14 years, we have lost many of them,” Gump said in a statement. “They did not live to see the full pensions they earned. Their surviving spouses and families continue to suffer the effects of the loss of up to 70% of earned and promised pensions.”

He added that “some have called the effort a ‘bailout,’ but the retirees are only asking the Federal government to restore their pensions.”

News February 8, 2023

Biden Uses Address to Pledge Support for Social Security, Medicare

The president acknowledged pocketbook issues causing Americans financial stress and proposed legislation to address several in wide-ranging speech.

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President Joe Biden called Social Security and Medicare a “lifeline for millions of seniors” and spoke of the need to raise the U.S. federal debt ceiling, while also saying he wanted to ensure “the wealthy and big corporations begin to pay their fair share” during Tuesday night’s State of the Union address.

In his second such address, Biden also pointed to the legislative accomplishments of his first two years in office and repeatedly asked lawmakers to “finish the job” on additional priorities—including non-compete agreements and employment benefits like paid sick, family and medical leave.

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“Social Security and Medicare are a lifeline for millions of seniors,” said Biden to an audience of Congress, cabinet members and guests. “Americans have been paying into them with every single paycheck since they started working. So tonight, let’s all agree to stand up for seniors. Stand up and show them we will not cut Social Security. We will not cut Medicare.”

He accused some Republicans of wanting to cut Social Security and Medicare, using the federal debt ceiling as leverage to do so. Specifically, he claimed that some Republicans wanted to “sunset” the benefits programs every five years, meaning they would have to be reapproved in five-year intervals.

Biden committed to opposing any attempt to cut Social Security or Medicare and said he would allow it, “Not today. Not tomorrow. Not ever.” His promise may be redundant, since his accusation that Republicans intend to cut either provoked loud jeering from many Republicans in the chamber.

Biden also urged Republicans to raise the U.S. debt ceiling without disruption.

“Let us commit here tonight that the full faith and credit of the United States of America will never, ever be questioned,” Biden said of the debt ceiling, currently set at $31.4 trillion. The debt ceiling was reached earlier this year, and the Treasury Department is currently using “extraordinary measures” to avoid issuing new debt, which it expects will keep the government funded at least until early June.

Biden noted that the debt ceiling was raised three times during the administration of former President Donald Trump without “preconditions or crisis.” He accused Republicans of wanting to hold “the economy hostage” over the debt ceiling, unless he makes major policy concessions.

Regarding federal tax revenues, Biden said, he would not raise taxes on “anyone making under $400,000 a year.” He also said he would pay for the federal programs he discussed in the address “by making the wealthy and big corporations begin to pay their fair share.”

His proposals for taxing corporations included raising the tax on stock buybacks to 4% from 1% “to encourage long-term investments instead.” The 1% stock buyback tax was imposed by the Inflation Reduction Act passed last year.

Biden also addressed Americans’ financial stress and said his administration will take on several consumer-related issues, including what he called “junk fees” charged to consumers by credit card providers, airlines, resorts, cable and internet companies and others. He urged Congress to pass his “Junk Fee Prevention Act.”

In another nod to financial issues facing working Americans, Biden referenced a proposed rule from the Federal Trade Commission which would ban the use of non-compete agreements in employment. He said that “30 million workers had to sign non-compete agreements when they took a job. … Not anymore. We’re banning those agreements so companies have to compete for workers and pay them what they’re worth.”

Non-competes are contracts, often required as a condition of employment, which require a new employee to legally commit to not work for an economic competitor for a period of time after the end of their employment. The FTC estimates that such a ban could raise wages by $300 billion.

The proposal could also have implications for the registered investment adviser firms some retirement advisories are acquiring to broaden wealth management capabilities.

Labor Secretary Marty Walsh, who reportedly will resign his post to become the next executive director of the NHL Players’ Association, was the “designated survivor” from the Biden Administration who did not attend the event.

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