Delphi Pbgc Settlement Agreement

The U.S. District Court Eastern District of Michigan decided this week that the U.S. Pension Benefit Guaranty Corp. was acting within the law by announcing the retirement plan for retirees employed under a 2009 agreement with Delphi. The 6th U.S. Court of Appeals upheld a lower court ruling and found that Subsection 1342(c) allows the termination of troubled retirement plans by agreement between the PBGC and the plan administrator without a court order. The court also stated that the retirees had failed to demonstrate that they were interested in the full amount of their unwavering but unfunded pension benefits, and PBGC`s decision to terminate the compensation plan was not arbitrary and capricious. “As a result of negotiations at the time of the spin-off, General Motors Corporation agreed to reload pension benefits for certain limited categories of hourly pensions and retirees, in case Delphi`s retirement schedule ceased. As with other union agreements it adopted by the former GM, General Motors Company will respect these commitments. Section 1342 describes the procedure for the PBGC to initiate proceedings for the termination of a pension plan in difficulty. After a thorough review of the legislation and the application of the relevant canons of legal interpretation, the 6th Circle concluded that Subsection 1342(c)(1) provided two alternative mechanisms for terminating a troubled pension plan: (1) by petition to a U.S. District Court in favor of an executive order that was to terminate the plan or (2) by agreement between the PBGC and the administrator. The court stated that PBGC had rightly argued that the legal system offers two procedural alternatives for the termination of a troubled pension plan, including through an agreement between PBGC and the plan administrator.

The settlement agreement has been submitted to the insolvency court for approval. Pension Benefit Guaranty Corp. took over the Delphi Salaried Pension Plan in 2009, when Delphi separated from General Motors Corp. and then went bankrupt. The company exited insolvency in 2009 as Delphi Automotive LLP, with no obligation to retire. During a public bailout, GM agreed to top up workers` pension benefits covered by three union agreements at the initial level, but employees and other employees received reduced pension benefits due to PBGC benefit caps. A: The PBGC is not aware of an agreement by GM to pay additional benefits to Delphi retirees. The termination was effected by an agreement between PBGC and Delphi, pursuant to 29 U.S. section.C 1342(c) – a part of labor law that governs the employee retirement security program. The plaintiffs – the retirees affected by the resignation of Delphi`s employee plan – have filed several challenges against the dismissal. First, retirees argued that Section 1342(c) required a court decision before a pension plan could be terminated.

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