Delphi Retirees Pension Restoration Act
Delphi Retirees Pension Restoration Act is a bill that would boost the amount of monthly pension guaranteed by the government for certain Delphi-related employer pension plans when those plans terminate. Specifically, it would require the Pension Benefit Guaranty Corporation (PBGC) to treat the guaranteed monthly benefit as the participant’s full vested plan benefit (the maximum benefit the plan would have paid if fully funded, subject to ERISA’s usual limits). The bill also directs PBGC to recalibrate previously calculated benefits, issue lump-sum catch-up payments to affected retirees and beneficiaries, and provide for the 6% interest on any past-due amounts. Funding for these increases would come from the unobligated balance of ERISA’s basic benefits guarantee fund. The act also defines which Delphi-related plans are covered and provides for administrative review of PBGC determinations, along with specified tax treatment for lump-sum payments. In short, if enacted, the bill would substantially raise guaranteed pension benefits for certain Delphi retirees and beneficiaries, accelerate and monetize back payments, and adjust related administrative and tax rules to support those changes.
Key Points
- 1Increase to guaranteed benefits: For covered Delphi plans, monthly guaranteed benefits would equal the participant’s or beneficiary’s full vested plan benefit, rather than the current guaranteed amount under ERISA 4022 with its phase-in and caps.
- 2Recalculation and lump-sum catch-up: PBGC would recalculate benefits for all eligible participants/beneficiaries and, within 180 days of enactment, pay a lump-sum amount intended to make up past underpayments, plus an additional 6% annual interest on past-due amounts.
- 3Eligible participants and covered plans: Eligible participants/beneficiaries are those in pay status or eligible for future payments and whose payments do not exceed the full vested plan benefits, excluding those covered by certain 1999 General Motors union top-up agreements. Covered plans include the Delphi Hourly-Rate Employees Pension Plan, Delphi Retirement Program for Salaried Employees, PHI and Delphi-related plans listed in the bill.
- 4Administrative review: PBGC determinations under this act would follow the standard administrative review process for benefit determinations.
- 5Funding source: Costs and related expenses would be paid from the unobligated balance of ERISA’s fund for basic guaranteed benefits (Section 4005).
- 6Regulations: PBGC, with Treasury and Labor input, could issue regulations to implement the Act.
- 7Tax treatment: Lump-sum payments would generally be includable in gross income over a 3-year period, unless the recipient elects to opt out. There are death-related and survivor rules to address taxes for beneficiaries and surviving spouses.
- 8ERISA amendment: The Act would add a provision to ERISA’s 4005 funding rules to recognize these Delphi-guaranteed payments as part of the guaranteed benefits.