With Release of New GAO Report, Sen. Brown and Rep. Ryan Urge Obama Administration to Protect Pensions for Auto Industry Workers

In Letter to Treasury Sec. Timothy Geithner, Brown and Ryan Seek Government Cooperation in Protecting Pensions of Auto Industry Retirees

WASHINGTON, D.C. - Following the recent Government Accountability Office Report (GAO) on retirement security in the auto sector, U.S. Sen. Sherrod Brown (D-OH) and to Rep. Tim Ryan (D-OH) wrote to U.S. Treasury Secretary Timothy Geithner today calling for his assistance in ensuring that auto worker's pension plans are protected. Brown and Ryan requested a meeting with Sec. Geithner to resolve the outstanding pension issues in the auto sector and protect pension plan participants.

"The bankruptcy process for Delphi and GM, which was made possible through the Automotive Industry Financing Program, protected the pensions of some Delphi workers but not others," Brown and Ryan wrote. "The retirees who were left out are still seeking fair treatment. Their families and communities are suffering severe economic hardship as a result of these losses."

The GAO Report entitled, Troubled Asset Relief Program (TARP): Automaker Pension Funding and Multiple Federal Roles Pose Challenges for the Future, reported that participants in the auto sector could stand to lose as much as $35 billion in earned pension benefits if their plans were to be terminated and assigned to the Pension Benefit Guaranty Corporation.

Today's letter called on Sec. Geithner to ensure that the TARP funds directed to support the auto sector were used in a manner consistent with the purposes of the TARP legislation, which include to "protect home values, college funds, retirement accounts, and life savings." The bankruptcy process for Delphi and GM, which was made possible through the Automotive Industry Financing Program, protected the pensions of some Delphi workers but not others.

Brown and Ryan previously led a bipartisan group of nine Senators and 24 Representatives from Ohio, Iowa, Michigan, Mississippi, and New York in calling for the federal government to restore fairness for Delphi retirees and minimize the economic effect of the pension loss on their communities.

Delphi was created in 1999 as a spinoff from GM, and most Delphi employees spent two-thirds of their careers as GM employees. When Delphi entered bankruptcy protection in 2005, many long-term employees were forced into early retirement as part of the restructuring agreement. Early retirement or supplemental benefits are not guaranteed by the Pension Benefit Guaranty Corporation (PBGC), and as a result, many of these Delphi retirees are at risk of losing a substantial percentage of their pension income.

Sen. Brown and Rep. Ryan invited a representative of the Delphi Salaried Retirees Association to testify before the Senate Health, Education, Labor, and Pensions Committee (HELP) in October 2009. In December 2009, Sen. Brown and Rep. Ryan testified on behalf of the Delphi retirees before the House Health, Employment, Labor, and Pensions Subcommittee (HELP).

In September, 2009, Senator Brown introduced companion legislation to Rep. Tim Ryan's (D-OH) bill that would create a Voluntary Employees Beneficiary Association (VEBA) to provide health coverage to Delphi and union hourly workers.

A full copy of the letter can be found below:


The Honorable Timothy F. Geithner
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Mr. Secretary:

The recent Government Accountability Office (GAO) report, Troubled Asset Relief Program (TARP): Automaker Pension Funding and Multiple Federal Roles Pose Challenges for the Future, raised a number of alarming concerns about the conflicting roles and responsibilities of the Treasury Department and the potential impact on retirement security in the auto sector. According to GAO, pension plan participants in the auto sector could stand to lose as much as $35 billion in earned pension benefits if their plans were to be terminated and assigned to the Pension Benefit Guaranty Corporation.

One of the purposes of the Emergency Economic Stabilization Act of 2008 that created TARP was for the Treasury Department to exercise its authority in a manner that "protects home values, college funds, retirement accounts, and life savings." TARP funding directed to the Automotive Industry Financing Program should be used in a manner consistent with those purposes.

Unfortunately, we have already seen in the case of the Delphi pension plans the human and economic costs of not protecting earned pension benefits. Today, tens of thousands Delphi salaried retirees and members of the International Union of Operating Engineers, the International Brotherhood of Electrical Workers (IBEW), and the International Association of Machinists and Aerospace Workers are facing draconian cuts to their retirement income. The bankruptcy process for Delphi and GM, which was made possible through the Automotive Industry Financing Program, protected the pensions of some Delphi workers but not others. The retirees who were left out are still seeking fair treatment. Their families and communities are suffering severe economic hardship as a result of these losses.

According to the GAO, we are now facing an even greater liability in auto sector pension plans. The failure of additional auto sector pension plans would not only cost retirees tens of billions of dollars in lost benefits, it would also require the Pension Benefit Guaranty Corporation to assume an estimated $42 billion in unfunded liabilities.

As a majority owner in General Motors, the U.S. government must not put itself in the pensions. It also would be a poor outcome for the U.S. taxpayer to sell our interests in the auto sector only to have the U.S. government to assume the unfunded liabilities in their pension plans.

We would like to request a meeting with you to discuss how Treasury and the Auto Task Force plan to resolve the outstanding pension issues in the auto sector and how you will ensure that the federal funding in the Automotive Industry Financing Program will protect pension plan participants and the PBGC from assuming the unfunded liabilities.

Sincerely,


Sherrod Brown                                                                                         Tim Ryan
U.S. Senator                                                                                           Member of Congress


# # #

Press Contact

202-224-3978