Delphi Plan-Specific FAQs

Since Delphi entered bankruptcy protection in 2005, the PBGC has worked with Delphi, GM and other stakeholders to keep all the pension plans ongoing or to have them assumed by GM. In 2008, GM did assume responsibility for a portion of the Delphi hourly pension plan, and was expected to take back the entire hourly plan. However, GM itself reorganized in bankruptcy earlier this year and now states it is unable to afford the additional financial burden of the Delphi pensions.

The process of transferring pension plans and their assets to PBGC trusteeship is administratively easier when done as of the end of the month. After review of the facts and circumstances in the Delphi case, we have determined that setting a termination date of July 31 for the Delphi plans will reduce administrative costs and ensure a smooth transition to PBGC trusteeship. The new date will not have a negative impact on any Delphi participants.

The PBGC can pay benefits only up to the legal limits.

In its news release of July 21, 2009, General Motors made the following statement about the hourly plan guarantee:

"As a result of bargaining at the time of the spin-off, General Motors Corporation did agree to top-up pension benefits for certain limited groups of hourly employees and retirees in the event that the Delphi hourly pension plan was terminated. As with other union agreements that it has assumed from the old GM, General Motors Company will honor these commitments."

Any additional benefit amounts that GM has promised to pay will come from GM. All questions about the additional guarantee should be directed to GM.

The PBGC is not aware of any agreement by GM to pay additional benefits to Delphi salaried plan retirees.

Delphi hourly plan participants who were transferred back to GM will continue to receive their benefit from the GM hourly plan. They will not be affected by the Delphi plan termination.

The PBGC can pay benefits only up to the limits set by law. Those limits are more likely to affect early retirees and those who receive supplemental benefits. Some individuals will see reduced benefits. The PBGC cannot estimate individual benefit amounts until several months after becoming trustee of the plan.

Each year PBGC uses a formula in the federal pension law, ERISA, to calculate the maximum guaranteed benefit. Since Delphi's plans were terminated July 31, 2009, their participants' maximum guarantees are based on 2009 amounts. (For plans terminating in bankruptcies that began on or after September 16, 2006, a different rule applies, but Delphi's bankruptcy began in 2005.)

If you begin receiving PBGC benefits at age 65 and have no survivor benefit, the maximum guarantee is $4,500.00 per month ($54,000.00 per year). You can find more information about other ages and types of annuity here.  Here is our maximum monthly guarantee table.

If you were already receiving benefits from your Delphi plan on July 31, 2009, the maximum guaranteed benefit is based on your age on that date, and the type of annuity you receive.

Other legal limitations can affect the amount of your PBGC benefit, and for certain disability benefits there is no reduction for your age in the maximum guarantee. All the legal limitations are applied independently, so more than one limitation may apply.

Most plans, including your plan, reduce the amount of pension benefits if the participant chooses a form of annuity that provides payments to a beneficiary upon the participant's death. Your plan includes adjustment factors to convert your benefit from the straight-life annuity amount (the normal form of annuity for single participants) to a joint-and-65%-survivor annuity with a "pop-up" (the normal form of annuity for married participants). This form of annuity provides that if you die first, your spouse will receive 65% of your benefit after your death for the rest of his or her life. If your spouse dies first, your benefit will "pop-up" to the straight-life amount (i.e., the amount payable if no survivor benefit is payable after your death).

To determine whether your benefit exceeds the maximum guaranteed benefit, PBGC starts with your benefit as calculated under the terms of your plan. For this calculation, PBGC uses your plan's adjustment factors for a joint-and-65%-survivor annuity based on your age and your spouse's age at the date that you retired, the same adjustment factors your plan used to calculate your benefits.

To calculate your maximum guaranteed benefit (MGB), PBGC uses its own adjustment factors for a joint-and-65%-survivor annuity, based on your age and your spouse's age at the date you begin to receive benefits from PBGC, to convert the maximum guaranteed benefit from the straight-life annuity amount to the joint-and-65%-survivor annuity (with a "pop-up") amount. If you were already retired when your plan ended, PBGC will use your age and your spouse's age at the date of plan termination. If you retire after your plan ended, PBGC will use your age and your spouse's age at the date you retire.

PBGC then compares your plan benefit to your MGB; if your plan benefit is greater than your MGB, PBGC will not guarantee the portion of your plan benefit in excess of the maximum guaranteed benefit limit.

It will take us several months to review all the information needed to calculate our estimated benefits for the entire plan. Given the number of participants, the complexity of the plan, and our desire to give you as accurate an estimate as possible, it may be six to nine months before we adjust benefits to estimated PBGC benefit amounts.

It will take several years to fully review the plan and finally determine all benefit amounts. We will notify you in writing of your PBGC benefit determination, and your right to appeal our determination. If you are receiving an estimated benefit, the letter will inform you whether your future payments will change and if so, how much higher or lower they will be.

In general, you must be at least age 55 to begin receiving benefits from PBGC. However, if you met the plan's conditions for earlier retirement (e.g. "30 and Out" or "85 Point" retirements) before the date of plan termination, you may be able to start receiving benefits earlier.

If you already receive pension benefits from the plan, you cannot withdraw your employee contributions in a lump sum. Your benefit will continue to be paid in the form of annuity you elected when you retired.

If you do not yet receive benefits from the plan, PBGC will contact you with information on your benefit and will notify you of your opportunity to withdraw your employee contributions. You will have 60 days from that notification to elect a lump-sum distribution of your employee contributions.

Yes. If you withdraw your employee contributions in a lump sum, your maximum guaranteed benefit will be reduced by the monthly annuity amount the contributions would have provided on the date you start to receive your remaining benefits.

If you do not withdraw your employee contributions, the full amount of your annuity payments including the part attributable to the employee contributions will be limited by the maximum guaranteed benefit limit.

No. PBGC was established to insure benefits from defined benefit pension plans, and does not pay health or other retirement benefits. However, you may be eligible for the Health Coverage Tax Credit if you are age 55 or older.

In general, once you have begun to receive benefits from the plan, you cannot change your form of annuity. You will continue to receive your benefits from PBGC in the same form that you elected before the plan ended.

The normal form of benefit for a married participant for the hourly plan and for the Part A basic benefit in the salaried plan is a joint-and-65%-survivor annuity with a "pop-up." This form provides that if you die first, your spouse will receive 65% of your benefit after your death for the rest of his or her life. If your spouse dies first, your benefit will "pop-up" to the straight-life amount (i.e., the amount payable if no survivor benefit is payable after your death). PBGC guarantees this form of benefit.

Your plan also provided for other post-retirement changes. If you elected the normal form of benefit for a married participant before the plan ended, the plan would have permitted you to change your benefit to a straight-life annuity if your marriage ended in divorce and your former spouse agreed, and then to revert back to a joint-and-65%-survivor annuity if you remarried. PBGC will not allow these changes, but we will honor such changes made before the plan ended.

The normal form of benefit for an unmarried participant for the hourly plan and for the Part A basic benefit in the salaried plan is a straight-life annuity. If you were single when you retired and you elected the straight-life annuity before the plan ended, the plan would have permitted you to change your benefit to a joint-and-65%-survivor annuity if you later married. PBGC will honor any such changes you made before the plan ended, but PBGC will not allow you to make any changes to your form of benefit after your plan ended.

PBGC cannot pay you more than your plan would have provided had you retired at your normal retirement age with a straight-life annuity.

If an event such as a shutdown or lay-off occurred after July 26, 2005, the additional benefits may not be fully guaranteed. The phase-in rule described in our general FAQs would treat the additional benefits as if they were first adopted by the plan on the date of the layoff or shutdown.

If you are receiving higher benefits because of this early retirement incentive, the additional benefits may not be fully guaranteed. The phase-in rule described in our FAQs may apply.

As PBGC determines your guaranteed benefit, we also determine whether the assets available in your plan will provide benefits greater than the guaranteed benefit. These assets are allocated to benefits according to priority categories set by law.

PBGC guarantees basic benefits, regardless of the assets your plan has when PBGC takes it over. Your benefit as finally determined will not be less than the amount PBGC can guarantee.

Federal law outlines how assets from terminated pension plans are distributed, with priority given to retirees and people eligible to retire. PBGC follows specific rules to allocate pension plan assets to six priority categories (PC1 through PC6). PBGC allocates the plan's assets to benefits owed in each category, in this priority order, until all of your plan's assets are allocated, so you may receive benefits above what PBGC guarantees.

The law provides a formula for PBGC to allocate a portion of its recovery from the plan sponsor to provide benefits that are not guaranteed or funded by plan assets. Generally, in the Delphi plans, the recovery may allow PBGC to pay additional benefits in Priority Category 3.