Workforce.com

Delphi to Freeze Pension Plans

September 10, 2007
Financially troubled auto parts manufacturer Delphi Corp. will freeze its two pension plans and shift some pension liabilities to former parent General Motors Corp. under a bankruptcy reorganization proposal filed Thursday, September 6, and an agreement reached with GM.

Delphi said the two plans for hourly and salaried employees would be frozen, with participants not earning any new benefits, starting the first month after the reorganization plan receives final approval.

As part of the agreement with GM, Delphi would transfer $1.5 billion in liabilities in the hourly plan to GM. In return, GM would receive a $1.5 billion note from Delphi.

As of the end of 2006, the two plans combined were underfunded by just over $4 billion, with $14.9 billion in liabilities and $10.7 billion in assets, according a Delphi filing with the Securities and Exchange Commission.

Delphi said it will replace the frozen plans with defined-contribution plans.

Delphi, which last year reported a $5.5 billion loss—including about $3 billion in attrition charges—on revenue of $26.4 billion, also will end its health care plan for hourly retirees.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.