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By FATIMA HUSSEIN - Associated Press 1 hr ago




WASHINGTON (AP) — Dave Muffley thought he had it made when it came to a solid retirement. The Indiana man spent roughly 30 years as a salaried maintenance technician for Delphi Corp., a subsidiary of General Motors Corp., and expected to retire with a comfortable income by the time he hit 62.

Now, they’re looking to Congress to do for them what the courts would not. Legislation to restore the pension savings of the workers has gained support from the left and the right in Congress. It passed the House on Wednesday and supporters are hopeful the Senate will follow suit.

It's named the Susan Muffley Act, after Dave's wife, who became sick and died while they were grappling with the hit to his retirement fund.

The retirees allege that they were discriminated against as salaried employees, compared with union-covered workers whose pensions were preserved through the bankruptcy. The salaried workers are the engineers, technicians and mid-level swath of employees who stood between the well-paid executives and the union-covered workers at the company.

After taking a buyout from Delphi at age 55 to avoid a potential layoff, Muffley says, he took one job after another to tide him over until he could retire at 62. It was in that time that his wife was diagnosed with pancreatic cancer and died within three years.

“Things fell apart, and things fell apart in a big way,” Muffley says. He estimated he’s lost at least $130,000 in savings due to the pension cuts over the years, and he’s not alone.

Despite the bipartisan support, there is some resistance in Con
gress to spending tax dollars to bail out pension funds.

For the retirees, the struggle to get the legislation into law is the latest and perhaps last battle in an ordeal that started when the workers got swept up in macroeconomic crosscurrents of the recession.

Muffley and others in 2009 established the Delphi Salaried Retirees Association — something of a support group for workers at the auto parts company who had to get through not only job losses, but retirement cuts and the loss of health plans.

Retirees tell stories of loss, severe depression, divorce and altered courses of their lives. Some retirees' children put off going to college, other workers faced health difficulties from the stress of the cuts.
The salaried retirees have gotten support from every corner of local government, state legislatures, attorneys general and even sympathetic words from this president and the last.

Presidential candidate Joe Biden in September 2020 said he would work with senators to help restore Delphi workers’ retirement savings. The next month, President Donald Trump issued a memo calling on the Treasury Department and other agencies to act on the issue.
But those words didn't translate into action. Nothing came of Trump's memo. Nor did anything happen in the first 18 months of the Biden administration.

A number of legislative proposals to help the Delphi workers have come and gone over the years without becoming law. The latest bill, which cleared the House on a 254-175 vote, would restore the workers' benefits and retroactively make up for what they've lost since 2009.

Members of Congress from both parties, mostly from Michigan, Indiana and Ohio, have sponsored the legislation. Reps. Dan Kildee, D-Mich., and Mike Turner, R-Ohio, and Ohio Sens. Sherrod Brown, a Democrat, and Rob Portman, a Republican, are among those backing it.

Co-sponsors span the spectrum, from Rep. Mo Brooks of Alabama, a founder of the conservative House Freedom Caucus, to Rep. Andy Levin of Michigan, a member of the progressive caucus.

But when GM plunged into the biggest industrial bankruptcy proceeding in history in 2009, and the federal government negotiated its restructuring, Muffley’s expected retirement package was slashed, and his life’s trajectory would spiral.

The Russiaville resident, now 68, lost 30% of his retirement savings, his promised health care coverage and his faith in government.

Muffley is one of an estimated 20,000 Delphi workers hurt by the GM bankruptcy, and many have spent the past 13 years fighting to get back what they lost. After taking the issue all the way to the U.S. Supreme Court, which declined to hear their case this year, the retirees were cut off from their last legal remedy.

The White House on Friday issued its own a statement in support of the bill, saying the administration “supports a secure retirement for affected workers.”

Muffley points to other legislative saves for pension plans, like the bipartisan Butch Lewis Act that was included in the American Rescue Plan. That provision stalled the insolvency of roughly 200 multi-employer pension plans for 30 years, saving the benefits of roughly 3 million workers. Biden spotlighted the measure in a recent visit to Ohio.

But there are skeptics. During House debate on Wednesday, Rep. Bob Good, R-Va., called the measure another “Democrat bailout bill by the sponsors of the nanny state.”

“Why should the constituents of my Virginia 5th District pay for someone else’s retirement plan?" he said.

HOW IT GOT HERE
When GM went through bankruptcy in June 2009 due to massive losses during the Great Recession, the company said it would not assume pension liabilities for the Delphi unit's salaried workers — largely because it didn't have an agreement with them, as it had negotiated with unions for hourly workers.

The government's Pension Benefit Guaranty Corp. then assumed responsibility for the 20,000 salaried workers’ pension plan, and cut workers' and retirees’ monthly benefits if they were larger than the statutory maximum benefit that the agency was guaranteed to pay. As a result, some retirees' pensions were cut by as much as 70%. But GM did step in to cover pension losses for union workers.

Those who lost benefits were 4,044 workers in Indiana, 5,181 in Ohio, 5,859 in Michigan and thousands of others around the country.

While cutbacks in bankruptcies aren't uncommon, the Delphi workers argued it was unfair that union workers' pensions were protected by GM while salaried workers were left with permanent cuts to their retirement fund as well as permanent cuts to their health benefits.

The arrangement played out in conjunction with a deal negotiated by then-Treasury Secretary Tim Geithner and then-National Economic Council Director Larry Summers, who led a task force that sank millions of dollars into saving GM.
Part of the rationale at the time was the need to keep union workers from striking, while salaried workers were seen as more expendable.

A 2013 inspector general's report said that while the union workers had leverage “to prolong Delphi’s bankruptcy or strike, which GM believed would significantly impact its ability to survive, Delphi’s salaried retirees had no leverage, other than what they hoped would be political leverage.”

The report estimated the salaried retirees had lost $440 million in pension benefits. In today's dollars, the retirees would need $900 million to be made whole.

In a 2011 op-ed in The Washington Post, Geithner said the bankruptcy “meant sacrifices across the board — from managers, unions, stockholders, creditors and dealers.” But the intent was “to stop the American automobile industry from unraveling” and causing a deeper recession that could have cost tens of thousands of additional jobs.
Geithner declined to comment for this story. Summers did not respond to a request for comment.

In January, the Supreme Court denied Delphi retirees' efforts to review their case. The court effectively upheld a federal court's ruling that the law allows for distressed pension plans to be closed without court approval.
Kildee, one of the bill's sponsors, told The Associated Press the case was "particularly egregious because it was the federal government that engineered the bankruptcy.”
Turner said during the House debate that legislation was necessary because “no one else has had the White House pick winners and losers and take away their pensions. It is our responsibility as members of Congress to address this injustice."
WHAT THE WORKERS SAY
“The reality is that salaried workers were singled out and it’s the government that caused this,” said Bruce Gump, who lost 40% of his pension and serves as chairman of the Delphi Salaried Retirees Association.

“I was 57 when this happened to me and it was a tough time, for this to happen at the bottom of the recession," he said. “The fact that we’re finally getting the attention of the secretary of treasury and Congress creates some hope in us."

Julie Naylor, a 68-year-old former nurse who lives in a suburb of Greenville, South Carolina, says restoring her husband’s pension and health care would mean she could afford basic necessities for her family. Her husband, Bruce Naylor, suffered a stroke after a routine outpatient surgery, caused by an undiscovered brain tumor. With her husband now paralyzed on his right side and with limited speech abilities, Julie Naylor says without the health care promised to him, the medical bills have piled up.

Bruce Naylor is 6 feet, 6 inches and too tall for his wheelchair. Julie Naylor says if her family had the money owed to them through his pension, “I wouldn’t have to wait for Medicare” to be approved for a chair that fits. “We could’ve just bought it with what is owed us,” she said.

“We live a very austere life and a very uncertain life," she said. “I never thought he could lose half of his pension and half of his life savings.”

WHAT'S NEXT
The legislation would require the government to “top up” the pensions of the salaried Delphi workers, as GM did for the unionized workers.

Bill Kadereit, president of the National Retiree Legislative Network, said the Delphi workers’ fight highlights the archaic nature of corporate bankruptcy law, and how it can harm workers.

“In many ways the federal government basically threw them under the bus and made the sacrifice of these people to make a deal,” he said.

To Muffley, that's what made the deal so painful.
“I can't believe our government would do something like this," he said in advance of the House vote.

And Muffley has a warning for others who may think their own promised benefits are secure: “If the government could do this to us, what else could they do to you?”

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Wow, what a screw job. I guess they should have unionized, that's where the real muscle is. Thanks for posting, Oldsmobile.
 
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Wow, what a screw job. I guess they should have unionized, that's where the real muscle is. Thanks for posting, Oldsmobile.
My guess is that they were classified as management. Usually management employees are not eligible for union representation. As bad as this is, we should not forget that the wage workers would have been in the same boat if not the the United Auto Workers.
 

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I'm torn on this. I feel for them but also recognize that a government bailout sends a really bad message and I bet every company with a pension is thinking "how can I dump my pension obligations on the government"?

I have a 401k, is anyone going to bail me out if my returns aren't ample enough for my retirement? I'm at the whim of the markets with substantial YTD losses - no one is covering me, so why should I and everyone else cover a partial loss of someone's pension?

Again, really torn. I know a 401k situation is a little different as I'm planning on being at the whim of the market vs. someone who was banking on their pension. But still - it is money out of my pockets to benefit someone else that quite possibly will still have a better pension than my 401k income, even if their pension is 30% lower.

Maybe a cap on government assistance depending on the pension level or something.

I don't know.
 

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I'm torn on this. I feel for them but also recognize that a government bailout sends a really bad message and I bet every company with a pension is thinking "how can I dump my pension obligations on the government"?

I have a 401k, is anyone going to bail me out if my returns aren't ample enough for my retirement? I'm at the whim of the markets with substantial YTD losses - no one is covering me, so why should I and everyone else cover a partial loss of someone's pension?

Again, really torn. I know a 401k situation is a little different as I'm planning on being at the whim of the market vs. someone who was banking on their pension. But still - it is money out of my pockets to benefit someone else that quite possibly will still have a better pension than my 401k income, even if their pension is 30% lower.

Maybe a cap on government assistance depending on the pension level or something.

I don't know.
I started working at IBM right around the turn of the millennium, when they were one of the first blue chippers in '97 to dump their pensions and move everyone to a combo of a cash balance and 401k plan. The senior folks who weren't grandfathered (over the age of 40 at that time) lost bigly from a financial standpoint. The cash balance plan collecting interest at a rate of prime plus one percent, as we headed towards two decades of declining interest rates, killed those guys. They worked around 20 years under a promise of a pension, only to have the rug yanked (by a financially healthy corporation no less).

The problem is this. I started with a 401k, and if you do, you will probably end up to the better vs. a pension in the long run. Obviously it takes some knowledge to properly invest to be able to survive market fluctuations over a lenghty working career - and companies weren't great 20 years ago at providing education on the matter, though it's improved quite a bit and things like target date funds help the uninitiated a lot. But the key is no matter what happens, that money is yours from day 1 (even if there are some laggard companies out there that hold a vesting period on the employer match). Company goes bankrupt, your retirement fund is still safe.

With a pension the money is never yours until you retire. You are banking on a corporation making good on its word so you can plan to have X dollars per month in retirement. So it's not right for these people to have their retirement hinging on something completely out of their hands, and then wiped out by poor corporate decisions. The answer to that today is to completely move all new employees to a 401k plan, but for those who started on a pension, they shouldn't be left out in the cold due to circumstances beyond their control.

And yes, it is solid evidence of why having a union at your back is worthwhile, particularly for the blue collared.
 

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I started working at IBM right around the turn of the millennium, when they were one of the first blue chippers in '97 to dump their pensions and move everyone to a combo of a cash balance and 401k plan. The senior folks who weren't grandfathered (over the age of 40 at that time) lost bigly from a financial standpoint. The cash balance plan collecting interest at a rate of prime plus one percent, as we headed towards two decades of declining interest rates, killed those guys. They worked around 20 years under a promise of a pension, only to have the rug yanked (by a financially healthy corporation no less).

The problem is this. I started with a 401k, and if you do, you will probably end up to the better vs. a pension in the long run. Obviously it takes some knowledge to properly invest to be able to survive market fluctuations over a lenghty working career - and companies weren't great 20 years ago at providing education on the matter, though it's improved quite a bit and things like target date funds help the uninitiated a lot. But the key is no matter what happens, that money is yours from day 1 (even if there are some laggard companies out there that hold a vesting period on the employer match). Company goes bankrupt, your retirement fund is still safe.

With a pension the money is never yours until you retire. You are banking on a corporation making good on its word so you can plan to have X dollars per month in retirement. So it's not right for these people to have their retirement hinging on something completely out of their hands, and then wiped out by poor corporate decisions. The answer to that today is to completely move all new employees to a 401k plan, but for those who started on a pension, they shouldn't be left out in the cold due to circumstances beyond their control.

And yes, it is solid evidence of why having a union at your back is worthwhile, particularly for the blue collared.
I had my pension frozen and then converted to 401k in I believe 2000 or 2001.

As I said, I'm really torn on how to feel and what the right response is. Perhaps the unions and executives that are all set can share a little of the pain, especially the executives making the decisions and whose future is well covered money-wise.

I know there are all sorts of things wrong and impossible about my thoughts. I simply have a gut feeling of wrongness but no idea what to do. I guess I feel the wrongness in that the executives and unions covered their backs and left everyone else to flounder and you and I to pick up the tab.
 

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I feel for these workers but lots of workers in smaller companies have lost their pensions in bankruptcies. If you do it for one it's unfair to others.
The feds could cover all this with a smidge of the recent trillions of magical money they've sent into the stratosphere.
 

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This could all have been avoided if the government would just pass a law that says all pensions MUST be fully funded every year. Not allowing companies to fund them at whatever the minimum level is. This allows companies to screw their employees. Second pensions should be secured and not allowed to be raided, in buy outs or takeovers, or reduced in bankruptcy, those monies should be secure with no way to access it for anything but pensions.
it’s easy, congress could do it but doesn’t have the balls or kittys to do it.
 

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Delphi salaried workers got screwed, my wife grabbed her lump sum right before they froze everything,but if she didn'nt have my benefits as a UAW retiree,she'd be in worst shape. Where did all the money go from Old GM?
 

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My guess is that they were classified as management. Usually management employees are not eligible for union representation. As bad as this is, we should not forget that the wage workers would have been in the same boat if not the the United Auto Workers.
Your guess would be wrong.....

Delphi's (just like GM's) "white collar" are not union, just like most "white collar" jobs in the US?
- Personally, I have never been part of a union at any of my 6 stops in the automotive industry.

We have heard about this issue for years; the way I understand it, GM didn't have to make them whole, so they didn't.
We have something called PBGC, Pension Benefit Guaranty Corporation but I am not sure where that fits in, do they only cover a certain portion, meaning the more you made, the bigger your pension was, and the larger your loss.

Today, "pensions" are going away, most companies that had them no-longer do for new hires, and most companies are trying to get them off the books. I was allowed to "cash out" my early career pension, because of its low dollar amount, I made crap back then and was only there for 4 years. When I left F-M I couldn't close it out, as it was over $20,000 but then they wanting to get them off the books offered me it present/cash value, rolled it into an IRA. My wife works for a bank, they froze hers, now it only earns a set percentage, and she instead gets a 5% lump-sum in her 401K to offset the contributions stopping (on-top of the 5% 401K match). Similar situation with my sister and the credit union she works at.
 
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I had my pension frozen and then converted to 401k in I believe 2000 or 2001.

As I said, I'm really torn on how to feel and what the right response is. Perhaps the unions and executives that are all set can share a little of the pain, especially the executives making the decisions and whose future is well covered money-wise.

I know there are all sorts of things wrong and impossible about my thoughts. I simply have a gut feeling of wrongness but no idea what to do. I guess I feel the wrongness in that the executives and unions covered their backs and left everyone else to flounder and you and I to pick up the tab.
Did any GM salary employees or retirees lose their pension? Remember, every one of these years-long big pension Delphi employees started as GM employees........ (GM spun-off Delphi in 1999)
 

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Did any GM salary employees or retirees lose their pension? Remember, every one of these years-long big pension Delphi employees started as GM employees........ (GM spun-off Delphi in 1999)
My father was a salaried engineer and retired in '99. He did not lose his pension, but he took a haircut on the payments and health insurance after the bankruptcy. Been 6 years since he passed so memory is getting foggy but I think it was roughly equal to his SS payment.
 

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My father was a salaried engineer and retired in '99. He did not lose his pension, but he took a haircut on the payments and health insurance after the bankruptcy. Been 6 years since he passed so memory is getting foggy but I think it was roughly equal to his SS payment.
My dad retired in?..... around 2003, he was GM hourly (UAW) he didn't lose anything, although I remember when things were melting down at GM in 2007/2008; he was concerned, my sister just bought her first house, I bought my second house (and hadn't yet sold the first one) I remember my dad saying; "I might be able to help one of you, but I'm not sure I can help both of you".

In your dad's case, (hypothetically) if $3,000/month ($36,000/year) goes to $1,500/month ($18,000/year) AND have to pay for your own health insurance, one would certainly notice and likely have to drastically alter your lifestyle, and I'm sure many were forced to go back to work (or spouses were forced to continue working).
 

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My dad retired in?..... around 2003, he was GM hourly (UAW) he didn't lose anything, although I remember when things were melting down at GM in 2007/2008; he was concerned, my sister just bought her first house, I bought my second house (and hadn't yet sold the first one) I remember my dad saying; "I might be able to help one of you, but I'm not sure I can help both of you".

In your dad's case, (hypothetically) if $3,000/month ($36,000/year) goes to $1,500/month ($18,000/year) AND have to pay for your own health insurance, one would certainly notice and likely have to drastically alter your lifestyle, and I'm sure many were forced to go back to work (or spouses were forced to continue working).
Yeah I remember him being chapped at the UAW guys not losing anything, but the salaried guys getting whacked. Thinking about it more I now also recall, GM was trying to buy out the non union pensioners post bankruptcy for a cash payment. He asked my advice and I said don't give up the monthly payments, plus if it was in your benefit why would GM be pushing it? A lot of my historical IBM cynicism was in play with respect to pensions. Of course in hindsight due to short life, he would have made out better with the payoff, but you can't really plan for that.
 
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This could all have been avoided if the government would just pass a law that says all pensions MUST be fully funded every year. Not allowing companies to fund them at whatever the minimum level is. This allows companies to screw their employees. Second pensions should be secured and not allowed to be raided, in buy outs or takeovers, or reduced in bankruptcy, those monies should be secure with no way to access it for anything but pensions.
it’s easy, congress could do it but doesn’t have the balls or kittys to do it.
It’s just not that easy though. Pensions are failing in a lot of unions all over the country and in a lot of cases it’s because there are less and less union workers paying into it to support the amount of retirees drawing from it.

Illinois government is a perfect example of it. The pensions are guaranteed and people can retire so early while taking a large portion of their salary and medical that the current employees have no chance to cover the costs. That puts the onus on people (tax payers) to pick up the slack. Most people, rightfully so, have no interest in paying for someone else’s pension.

If the market takes a huge hit in the next few years tons of these pensions that are just barely holding on will be insolvent.

I think 401k’s that an employer can contribute to is a better answer than a pension and all the associated overhead. That’s also money that no one can touch other than the employee and if they get loans on it or pull money out it’s on them.
 

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Yeah I remember him being chapped at the UAW guys not losing anything, but the salaried guys getting whacked. Thinking about it more I now also recall, GM was trying to buy out the non union pensioners post bankruptcy for a cash payment. He asked my advice and I said don't give up the monthly payments, plus if it was in your benefit why would GM be pushing it? A lot of my historical IBM cynicism was in play with respect to pensions. Of course in hindsight due to short life, he would have made out better with the payoff, but you can't really plan for that.
They want to get rid of the liabilities, they usually figure it out, but your father sounds like my M-I-L, she was getting a portion of my F-I-L's pension after he passed, I said don't cash it out; because she didn't need the lump sum.. it wasn't 2-3 years, and she was gone; got ~$150K lump sum instead of ~$30K in monthly payments. "She was right" 😕
 
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