S-1950-119
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
Sponsored by Jon Husted (R-OH)
What it does
This bill would require the Pension Benefit Guaranty Corporation (PBGC) to pay former employees of Delphi — an auto parts manufacturer — their full vested pension benefits, removing two existing caps: the phase-in limit and the maximum guaranteed benefit ceiling. It would also require the PBGC to make lump-sum back payments to affected retirees for the difference between what they were paid and what they would have received under the new calculation, plus 6% annual interest. A new federal trust fund would be established and funded through a permanent, open-ended appropriation to cover these costs.
Who benefits
Former Delphi employees and their beneficiaries covered by six specific pension plans — primarily hourly and salaried workers whose pensions were reduced when Delphi went bankrupt and its plans were taken over by the PBGC. Salaried Delphi retirees who lost a larger share of their benefits relative to the PBGC cap would likely see the largest increases. Surviving spouses and other beneficiaries of deceased Delphi participants would also receive back payments. Indirectly, pension advocacy groups and other retirees in similar PBGC-capped situations may benefit from the precedent this sets.
Who is hurt
U.S. taxpayers broadly, as the bill creates an open-ended appropriation from the general Treasury with no stated cost ceiling. Other retirees in PBGC-terminated plans who are not covered by this bill may view the targeted relief as inequitable. The PBGC itself faces administrative burden and potential precedent pressure from other groups seeking similar legislation. Hourly Delphi employees already covered by a 1999 General Motors top-up agreement are explicitly excluded, meaning some former colleagues receive less than others.
Supporters argue
Supporters argue that Delphi's salaried retirees — unlike hourly workers protected by union agreements with General Motors — lost up to 70% of their promised pensions through no fault of their own when Delphi went bankrupt during the 2009 auto industry crisis. They contend that the PBGC's statutory caps were designed for ordinary plan terminations, not for a situation where the federal government's management of the GM bailout directly contributed to Delphi's pension shortfall, making full restoration a matter of basic fairness to workers who fulfilled their end of the employment contract.
Opponents argue
Opponents argue that the PBGC's benefit caps exist precisely to protect the insurance fund's solvency and apply uniformly to all terminated plans — and that creating a special Treasury-funded carve-out for one company's retirees sets a costly precedent that could invite similar legislation for thousands of other PBGC-covered retirees. They contend that the bill's open-ended appropriation bypasses normal budget discipline, with no CBO score cited in the bill text, and that directing Treasury funds to make whole a private pension shortfall blurs the line between insurance guarantees and open-ended federal pension obligations.