Dave Muffley thought he had it made when it came to a solid retirement.
The Indiana man spent roughly 30 years as a salaried maintenance technician for Delphi Corp. — a subsidiary of General Motors Corp. — and expected to retire with a comfortable income by the time he hit age 62. But when GM plunged into the biggest industrial bankruptcy proceeding in history in 2009 and the federal government negotiated its restructuring, Muffley’s expected retirement package was slashed — and his life’s trajectory would spiral.
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Muffley is one of an estimated 20,000 Delphi workers hurt by the GM bankruptcy and many have spent the past 13 years fighting to get back what they lost. After taking the issue all the way to the U.S. Supreme Court, which declined to hear their case this year, the retirees were cut off from their last legal remedy.
Now, they’re looking to Congress to do for them what the courts would not. Legislation to restore the pension savings of the workers has gained support from the left and the right in Congress. It passed the House on Wednesday and supporters are hopeful the Senate will follow suit. It’s named the Susan Muffley Act, after Dave’s wife, who became sick and died while they were grappling with the hit to his retirement fund.
The retirees allege they were discriminated against as salaried employees, compared to unionized workers whose pensions were preserved through the bankruptcy.
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Despite the bipartisan support, there’s some resistance in Congress to spending tax dollars to bail out pension funds. As a presidential candidate in September 2020, Joe Biden said he would work with senators to help restore Delphi workers’ retirement savings. The next month, President Donald Trump issued a memo calling on the Treasury Department and other agencies to act on the issue. But those words didn’t translate into action.
A number of legislative proposals to help these workers have come and gone over the years without becoming law. The latest bill, which cleared the House on a 254-175 vote, would restore the workers’ benefits and retroactively make up for what they’ve lost since 2009. Members of Congress from both parties, mostly from Indiana, Michigan and Ohio, have sponsored the legislation.
Muffley points to other legislative saves for pension plans, like the bipartisan Butch Lewis Act that was included in the American Rescue Plan. That provision stalled the insolvency of roughly 200 multi-employer pension plans for 30 years, saving the benefits of roughly three million workers. Biden spotlighted the measure in a recent visit to Ohio.
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When GM went through bankruptcy in June 2009 due to massive losses during the 2008/09 financial crisis, the company said it wouldn’t assume pension liabilities for the Delphi unit’s salaried workers — largely because it didn’t have an agreement with them, as it had negotiated with unions for hourly workers.
The government’s Pension Benefit Guaranty Corp. then assumed responsibility for the 20,000 salaried workers’ pension plan and cut workers’ and retirees’ monthly benefits if they were larger than the statutory maximum benefit that the agency was guaranteed to pay. As a result, some retirees’ pensions were cut by as much as 70 per cent. But GM did step in to cover pension losses for union workers.
While cutbacks in bankruptcies aren’t uncommon, the Delphi workers argued it was unfair that union workers’ pensions were protected by GM, while salaried workers were left with permanent cuts to their retirement fund as well as permanent cuts to their health benefits.
A 2013 inspector general’s report said while the union workers had leverage “to prolong Delphi’s bankruptcy or strike, which GM believed would significantly impact its ability to survive, Delphi’s salaried retirees had no leverage, other than what they hoped would be political leverage.”
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In January, the Supreme Court denied Delphi retirees’ efforts to review their case. The court effectively upheld a federal court’s ruling that the law allows for distressed pension plans to be closed without court approval.
The current legislation would require the government to top up the pensions of the salaried Delphi workers, as GM did for the unionized workers.
Bill Kadereit, president of the National Retiree Legislative Network, says the Delphi workers’ fight highlights the archaic nature of corporate bankruptcy law and how it can harm workers. “In many ways the federal government basically threw them under the bus and made the sacrifice of these people to make a deal.”
To Muffley, that’s what made the deal so painful — and he has a warning for others who may think their own promised benefits are secure. “If the government could do this to us, what else could they do to you?”