December 2014 Delphi Salaried Participant Report

(Current Update shown in bold)

Delphi Retirement Program for Salaried Employees
(Delphi Salaried Plan)
Processing Update: December 30, 2014

During December 2014, PBGC has:

• Completed initial agency review of KPMG's draft report and workpapers of the complete valuation of the plan's assets, and begun discussing potential updates/revisions with KPMG;
• Received from Bolton Partners its draft report analyzing the plan's benefits, liabilities and unique provisions, and begun agency review of the report;
• Completed review of programming specifications for approximately 19,000 participants not affected by the plan's Cash Balance benefit formula and all participants with Qualified Domestic Relations Orders (QDROs); review of programming specifications now complete for all plan participants.

As of November 2014, PBGC had:

• Received from KPMG its draft report of the complete valuation of the plan's assets and begun agency review of that report.
• Completed the valuation of amounts recovered through Delphi's bankruptcy proceedings. Under the law, recovered amounts will pay for a portion of:
  • pension benefits above PBGC's statutory guarantee limits;
  • insurance premium payments Delphi had failed to make to PBGC; and
  • PBGC's liability for benefits that Delphi did not fund.
• Received from GM's Canadian subsidiary data needed to calculate benefits for a group of participants.
• Completed review of programming specifications for approximately 2,000 participants covered by the plan's Cash Balance benefit formula.

As of October 2014, PBGC had:

• Built a participant database that includes information needed to calculate and value benefits.
• Worked with KPMG, the global accounting and auditing firm, to identify all Salaried Plan assets, which are held in a complex pool structure at General Motors Asset Management (GMAM).
• Assembled a team of internal experts, working alongside KPMG and GMAM staff, to determine the value of plan assets as of the date of plan termination, July 31, 2009. At this point, values have been determined for approximately 85% of Salaried Plan assets. Work continues on the remaining hard-to-value assets, primarily real estate and private equity holdings. KPMG is expected to deliver a draft of its asset-evaluation report to PBGC on November 26, 2014.
• Contracted with Delphi's former Director of Pension and Welfare Benefit Plans to assist PBGC's Field Benefit Administration offices with plan administration matters.
• Developed customized Delphi templates for participant/beneficiary statements to be used when final benefit determinations are issued.
• Received and begun reviewing programming specifications from Bolton Partners, the actuarial contractor that PBGC will be using to make individual benefit determinations once plan asset values are finalized.

Background

PBGC terminated six (6) defined benefit pension plans sponsored by the former Delphi Corporation on July 31, 2009, when the former auto parts manufacturer liquidated in bankruptcy. This is the second largest termination since Congress created PBGC in 1974.

When PBGC took over as trustee of the Delphi Salaried Plan, the first priority was to ensure that monthly benefits being paid to nearly 8,000 retirees and beneficiaries continued without interruption. As of October 2014, PBGC is making payments to over 1,500 additional Delphi Salaried Plan retirees and beneficiaries who have retired since plan termination, and the agency continues to process new applications for benefits from participants who are eligible and apply.

Immediately following trusteeship, PBGC began collecting plan records, securing plan assets, and undertaking the analysis necessary to make estimated payments and ultimately prepare final benefit determinations. In order to make such final benefit determinations, PBGC must ascertain values for plan assets and amounts recovered from bankruptcy proceedings. The complexities and unique circumstances associated with the hard-to-value assets of the Delphi Salaried Plan have presented some challenges. PBGC's rigorous review procedures and extensive valuation process ensure that all plan assets and recoveries are fully accounted for in determining final benefits of participants and beneficiaries.

All payments received from PBGC are estimates until the agency makes final benefit determinations. PBGC expects to issue final benefit determinations for the Delphi Salaried Plan starting October 2015. Of course, any participant/beneficiary has the right to appeal PBGC's final benefit determination.