By Scott Smith
Tribune staff writer
Some Delphi salaried retirees will now be getting two benefit checks after Prudential Financial Inc. agreed to take over a portion of the retirees’ payments, the Pension Benefit & Guaranty Corp. announced Monday.
The change won’t affect what each retiree receives, but that hasn’t stopped the Delphi Salaried Retirees Association from launching an investigation.
According to PBGC officials, Prudential will now pay out Part B contributions the retirees made during their years with General Motors and Delphi.
The contributions went into an annuity, and the annuity payments were calculated as part of the benefits the PBGC agreed to take over after Delphi emerged from bankruptcy in 2009.
So instead of receiving the full amount of the benefit in a check from the PBGC, the retirees will get part of the payment from the PBGC and part from Prudential.
The salaried retirees association, which has been fighting the federal administration for a restoration of full pension benefits, is staying quiet so far.
This week, DRSA officials announced they were aware of the change, but had no further comment other than saying they were looking into the legal aspects of the change.
Government officials however, say the change will not affect any of the retirees, other than receiving two checks.
“[The PBGC] has been working for several years with Prudential and [Aetna Life Insurance Company and Metropolitan Life Insurance Company] on this long, complex process,” PBGC officials said in a statement to retirees.
“After PBGC took responsibility for your Delphi pension benefit in 2009, we learned that your benefit had been funded by two separate sources. Most of your benefit was funded by Delphi. However, a small portion was funded by your employee contributions. Your pension plan used your contributions to purchase an annuity for you from an insurance company. This small annuity will now be paid by Prudential.”
Kokomo Delphi retiree James Davis isn’t happy about the change, saying he should be getting the annuity payment on top of what he receives each month from the PBGC.
“Now I learn that all the money I put in during 38 1/2 years of employment does not benefit me or my family at all. It only benefits the U.S. government. I should get credit for that on my taxes!” he said in a letter to the Tribune.
DRSA officials, who miss few opportunities to push for additional pension benefits, might be ready to back that stance.
“The PBGC is an inept, incompetent organization,” DRSA chair Den Black said. “They have to be watched like a hawk.”
PBGC spokesman Jioni Palmer said for the past four years, Prudential has been sending the annuity payments to the PBGC, which then passed the money on to the retirees.
That arrangement is changing at Prudential’s request, he said.
“Prudential felt that because of the agreement they’d made with the Delphi retirees, there was an irrevocable commitment, and the money had to come from them,” Palmer said.
Prudential spokesman Josh Stoffregan said the company cannot change the dollar amount of the annuity payments in the future, per the contract.
Scott Smith can be reached at 765-454-8569 or at firstname.lastname@example.org.
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