Delphi to freeze pension plans
Posted On: Sept. 07, 2007 11:24 AM CST
TROY, Mich.—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 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 on 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 revenues of $26.4 billion, also will end its health care plan for hourly retirees.
