Now that PBGC has begun to issue benefit determinations for the Delphi Salaried plan, we want to let you know what to expect next and answer your questions.
- Delphi Salaried Plan Facts
- Delphi Salaried Plan Processing
- Delphi Salaried Benefit Determinations
- Effect of the PBGC Legal Limits on the Salaried Plan
- PBGC’s Legal Limits
- Valuation of Assets
- Participants Not Yet Receiving Benefits
- Delphi Salaried Underpayments
- Delphi Salaried Overpayments
Delphi Salaried Plan Facts:
|Date of Plan Termination (DOPT):||
|Date of Plan Trusteeship (DOTR):||
|Number of Participants:||
|Plan Assets as of the DOPT:||
|Plan Liabilities as of the DOPT:||
|PBGC's liability for the Delphi Plan as of the DOPT||
PBGC has completed all of the steps needed to calculate plan benefits and began issuing benefit determinations to participants beginning in October 2015. As of December 2017, we have issued over 19,600 (or 98 percent) of the approximately 20,000 benefit determinations for the plan. The remaining benefit determinations to be issued include more complex participant and/or beneficiary matters (e.g., divorce settlements).
Yes. In June 2013, we issued early benefit determinations to about 3,000 retirees whose benefits would not change.
No. The benefit determination that you received in June 2013 is still valid.
We expect to have all of the remaining benefit determinations issued by the end of September 2018.
The Delphi Salaried plan is a large and highly complex plan with a unique and complicated benefit and asset structure. Collecting and validating the data, determining and valuing the plan's assets, determining and valuing amounts recovered in bankruptcy, calculating and valuing the plan benefits, and overlaying the complex ERISA legal limits takes a great deal of time in plans like this. In other large plans - particularly large airline or steel plans - it took PBGC an average of six years to complete the benefit determination process. PBGC has to take time on very complex plans like this to ensure participants receive all the benefits to which they are entitled.
While we do this work, we pay estimated benefits so retirees don't experience any interruption in their payments and those approaching retirement can begin payments when they are ready to retire.
The Payment Source shown on the Advice of Deposit statement has no impact on the benefits you receive. It is used for PBGC’s internal accounting purposes only.
If you are receiving estimated benefits, your statement will indicate an estimated benefits Payment Source (EST BEN1, EST BEN2, etc.). After you receive your Benefit Determination, your Payment Source will change from an estimated benefits source to a guaranteed benefits payment source (GUAR BEN1, GUAR BEN2, etc.). This change may not happen until after the appeals period has expired or – if you appeal – until your appeal has been decided. Please note that the number at the end of the Payment Source may change based on our internal system requirements when there is a change to your benefit, or even when there is no change to the benefits you receive.
Your benefit determination will tell you the amount of your benefit, whether you have been overpaid or underpaid, how we will address any underpayments or overpayments, and will explain your appeal rights.
You must file an appeal or request an extension of time to file an appeal, within 45 days of the benefit determination date.
PBGC can pay benefits only up to the limits set by the Employee Retirement Income Security Act (ERISA). See the section just below, "Effect of the PBGC Legal Limits on the Salaried Plan," for more information.
PBGC will send you a benefit determination statement along with your benefit determination that shows the information used to calculate your benefit. If you want to know more, you can request a benefit determination worksheet that shows the calculation in greater detail. Call PBGC's Customer Contact Center at 1-800-400-7242. You should receive your worksheet within approximately three weeks.
If you want to review the more detailed benefit determination worksheet before deciding whether to appeal, then you should request an extension of time to file an appeal within 45 calendar days of the benefit determination date.
Yes. When PBGC takes over a plan, we adjust benefits as soon as practicable (usually in about six to nine months after termination) for retirees receiving more than the legal limits. These are considered estimated benefits because we do not yet have all the data and plan information to determine final benefits so soon after termination.
In early 2010, PBGC adjusted benefits for retirees with benefits above the legal limits. Participants who retired after January 2010 received an estimated benefit reduced to the legal limit.
First, PBGC determines the amount that is "guaranteed." This is the limit on the amount PBGC can pay regardless of the amount of assets in the pension plan. Determining the guaranteed amount can be complicated, but in general, there are three limits that most commonly apply to participants' benefits. All the legal limitations are applied independently, so more than one limitation may apply. The three limits are:
The PBGC Maximum Guarantee:
This is a flat dollar amount based on the year your plan terminated, your age when you begin receiving benefits from PBGC, and the form of your benefit.
Since Delphi's plans were terminated in 2009, their participants' maximum guarantees are based on 2009 amounts.
For 2009 terminations, the maximum guarantee is $4,500 per month ($54,000 per year) for a benefit that is payable at age 65 and does not include a survivor benefit. That amount is reduced if PBGC payments start before age 65 or you select a form of benefit that provides for survivor payments. For certain disability benefits the maximum guarantee is not reduced for PBGC payments starting before 65. You can find more information about the maximum guarantee payable at other ages and in other types of annuity.
The "Accrued at Normal" Limit:
Some pension plans, such as Delphi's, feature a temporary supplement to "bridge" the gap between early retirement age and Social Security retirement age. Because PBGC cannot pay more than what the plan would have paid had you retired at the normal retirement age in the normal benefit form, most supplements are not guaranteed. Since the Delphi plan paid supplements during early retirement, participants who received the supplement are likely to be affected by this limit.
Federal pension law limits any benefit increases that have been in effect for less than five full years before the date of plan termination. PBGC will guarantee 20 percent of the monthly benefit increase (or, if greater, $20 per month) for each full year the increase was in effect. An increase is in effect from either the effective date or the adoption date of the plan amendment that created the increase, whichever is later. For example, a benefit increase in effect for two full years prior to the date of plan termination would have a guaranteed increase of the greater of $40 or 40 percent of the increase.
As part of the Delphi Salaried plan benefit freeze, effective Sept. 30, 2008, active employees and employees who separated from employment with less than five years of service as part of any divestiture that occurred between Aug. 1, 2006, and Sept. 30, 2008, were made I00 percent vested. Because the benefit freeze occurred within one year prior to the DOPT, the vesting is subject to $0/0 percent phase-in and is not guaranteed.
Some participants in PBGC-trusteed plans receive benefits that exceed the legal limits discussed above. This can occur if the plan has sufficient assets to fund benefits above the guarantee, or if PBGC recovers additional funds from the plan sponsor through bankruptcy proceedings.
PBGC completed the valuation of the Delphi Salaried Plan's assets in June 2015, and used that information to complete the remaining plan processing reports (such as the Actuarial Case Memorandum and Report), and to prepare participants' benefit determinations. While PBGC determined the value of the plan's assets in June 2015, documentation of the asset evaluation process was completed in December 2015.
The asset evaluation process for the Delphi Salaried Plan is described in the Asset Evaluation Package, which was posted to the PBGC website in December 2015. No additional asset valuation test work was performed by PBGC or its contractor, KPMG, after the Delphi Salaried Plan's assets were valued in June 2015.
Due to the complex structure and large volume of alternative investments in the Delphi Plans we hired KPMG, an independent global accounting firm, with sufficient resources and expertise to value the plan assets in coordination with PBGC.
The Delphi Salaried Plan assets were valued in two stages - Track 1 and Track 2. After completion of Track 1, PBGC decided that additional testing of asset values was necessary and instructed KPMG to conduct the additional work (Track 2). The Track 2 work resulted in an increase in the value of the plan's assets of $3 million.
Following completion of Track 2, we spent additional time documenting the asset evaluation process for this complex case to ensure that we explained in detail and with care the steps we took and the reasons for the determinations we made. That documentation is provided in the Additional Supplemental Plan Asset Evaluation Report, which summarizes and explains the Track 1 and Track 2 work performed by KPMG and the components produced separately by PBGC. The report also provides clarification and additional background regarding certain test procedures and findings documented and described by PBGC and its contractor, KPMG.
While PBGC determined the value of the assets in June 2015, documentation of the asset evaluation process (which consists of more than just a valuation of the plan's assets as of the date of the plan's termination) was completed in December 2015.
Upon determining the value of the Salaried Plan's assets and completing its actuarial review, PBGC began issuing benefit determinations in October 2015.
The Benefit Determination that we send you shows the benefits for which you are eligible.
The plan provided three types of retirement benefits, called Part A, Part B, and Part C. The type of benefit you receive depends on when you were hired and whether you made employee contributions to the plan.
If you were hired before January 1, 2001, you will receive a Part A Basic benefit, which is a traditional retirement benefit based on years of service and a benefit rate. You may also be eligible for an Early Retirement Supplement or Interim Supplement until age 62 and one month.
You may also receive a Part B Primary benefit and/or Part B Supplementary benefit, if you made employee contributions.
If you were hired or were rehired on or after January 1, 2001, you will receive a Part C benefit, which is a Cash Balance benefit. A Cash Balance benefit is defined as a hypothetical account balance based on a formula using pay credits and interest credits. The hypothetical account balance is converted into a monthly benefit when you retire.
Note: For some participants, the Benefit Determination Statement refers to Part C benefits as the “cash balance formula.”
You can choose when to begin your benefit, once you become eligible to retire. Your Benefit Determination Statement will include information on when you can begin receiving your benefit, and the type of benefits you are eligible to receive. How soon you can start receiving benefits depends on what retirement type(s) you are eligible to receive.
Normal – Age 65 and Older (Normal Retirement): Any participant can retire at age 65.
Separation with Vested Benefit (Deferred Vested Retirement): Any participant can retire as early as age 55. If you begin receiving benefits before age 65, your benefits will be reduced for early retirement.
Voluntary – 30 Years or More (30-Year Retirement): If you had at least 30 years of service with Delphi before July 31, 2009, you can retire immediately at any age. Any payments you receive before age 62 will be reduced for early retirement, but any payments you receive on and after age 62 will not be reduced for early retirement. Your Part A benefit includes an Early Retirement Supplement payable until age 62 and one month.
Voluntary – Age 55-62, 85 Points (Rule-of-85 Retirement): If, as of July 31, 2009, you worked for Delphi until at least age 55, and your age plus your years of service total 85 or more, you can retire immediately at any age. Any payments you receive before age 62 will be reduced for early retirement, but any payments you receive on and after age 62 will not be reduced for early retirement. Your Part A benefit includes an Interim Supplement payable until age 62 and one month.
Voluntary - Age 60 to 65 (Voluntary 60 & 10 Retirement): If you worked for Delphi until age 60 and had 10 or more years of service as of July 31, 2009, you can retire immediately at any age. If you begin receiving benefits before age 62, your benefits will be reduced for early retirement. This reduction does not go away at age 62. If you begin receiving benefits on or after age 62, your benefits will not be reduced for early retirement. Your Part A benefit includes an Interim Supplement payable until age 62 and one month.
Voluntary - Age 55 to 60 Not 85 Points (55 and 10 Retirement): If you worked for Delphi until age 55 and had 10 or more years of service as of July 31, 2009, you can retire immediately at any age. If you begin receiving benefits before age 65, your benefits will be reduced for early retirement.
You can begin receiving your Part C benefits at any time once you reach age 55. If you begin receiving your Part C benefits before age 65, your benefits will be reduced for early retirement.
Under the Internal Revenue Code and PBGC rules, you must begin receiving benefits by your Required Beginning Date, which is generally no later than April 1 of the calendar year following the year you reach age 70 1/2.
Where a participant died before retiring the Required Beginning Date for his or her Surviving Spouse is determined as follows:
First determine the later of:
- the year in which the participant died, or
- the year in which he or she would have reached age 70 1/2.
Next determine the calendar year that immediately follows the year determined above – December 1st of this year is the Required Beginning Date.
PBGC allows you to elect the date on which you want your annuity benefits to begin once you become eligible to retire. However, PBGC will generally only pay benefits prospectively, which means that you cannot choose a retirement date that is in the past. Therefore, to ensure that you are able to select your desired prospective (that is, future) retirement date, contact us about four months before you want to retire.
Under limited circumstances, you may be eligible to retire retroactively. For example, if you have an Early Unreduced Retirement Date that has already passed when you receive your Benefit Determination, you may be eligible to begin benefits as of that date even though it is in the past. In that case, you would receive a back payment for benefits due between your Early Unreduced Retirement Date and the date your monthly payments begin.
Your Benefit Determination will tell you if you are eligible for a retroactive retirement date. If you are eligible for a retroactive retirement date, please contact us right away to begin your benefits.
Ordinarily, benefits that begin before normal retirement age are reduced to account for the longer time they will be paid. However, if you meet certain conditions as of July 31, 2009, your plan provides benefits beginning before your normal retirement age that aren’t reduced for early retirement. That is, the plan would pay the same amount at an early retirement date as it would at your normal retirement date.
Your Benefit Determination Statement will tell you if you are eligible for early unreduced retirement and will indicate your earliest unreduced retirement date.
Please see the descriptions of the different retirement types above for more information on early unreduced retirement benefits in your plan.
Yes. In the past, PBGC did not pay pension benefits to workers who continued to work for the company that had sponsored the pension plan. PBGC rescinded its working retirement rule as of June 1, 2021. If you are entitled to a Delphi Salaried pension benefit and start receiving payments on or after June 1, 2021, you may receive that benefit even if you are still working. You may work for any company, including companies with a coordination of benefits agreement with Delphi.
In general, your benefits will be paid in the form of a monthly annuity. Your benefit determination will tell you if you are eligible to receive all or part of your benefit in a lump-sum payment.
When you apply for benefits, you will choose what type(s) of annuity you want for your benefits. You can choose between the plan’s normal forms of benefit and PBGC’s optional forms of benefit. (See Your PBGC Benefit Options FAQs for more information about PBGC’s optional forms of benefit.)
The plan has different normal forms of benefit for Parts A, B, and C.
Normal Forms of Benefit
Straight Life Annuity
Straight Life Annuity*
Straight Life Annuity**
Joint and 65% Survivor Annuity with Pop-Up
Joint and 65% Survivor Annuity*
Joint and 100% Survivor Annuity**
* Part B normal forms of benefit include a Modified Cash Refund if employee contributions are not withdrawn.
** Part C benefits include a Modified Cash Refund.
Note: With a Joint and 65% Survivor Annuity, if you die before your spouse, your surviving spouse will receive 65% of your monthly benefit for the rest of his or her life. With a Joint and 100% Survivor Annuity, your surviving spouse will receive 100% of your monthly benefit.
Note: A Joint and 65% Survivor Annuity with Pop-Up is a Joint and 65% Survivor Annuity that “pops up” to the amount of the Straight Life Annuity if your spouse predeceases you.
Note: The amount of your monthly benefit will be determined by the annuity form you elect.
A Modified Cash Refund pays the excess of employee contributions or cash balance account to the participant’s beneficiary, if the participant (and surviving spouse for Joint and Survivor annuities) dies before receiving payments totaling at least as much as the Employee Contributions plus interest or the Cash Balance account balance as of the participant’s date of retirement.
If you die after you start receiving benefits:
The form of benefit you choose when you retire will determine whether or not any benefits will be paid to your surviving spouse (or another beneficiary) when you die.
If you die before you start receiving benefits:
If you are married and die before you start receiving benefits, your surviving spouse will be entitled to a Qualified Pre-Retirement Survivor Annuity (QPSA). The QPSA is the survivor portion of the plan’s Normal Form of Benefit for married participants. (For Parts A and B, the QPSA is the survivor portion of the Joint and 65% Survivor Annuity. For Part C, the QPSA is the survivor portion of the Joint and 100% Survivor Annuity.)
If you are already eligible to begin receiving benefits when you die, your spouse can begin receiving QPSA benefits immediately upon your death. If you are not yet eligible to begin receiving benefits when you die, your spouse can begin receiving QPSA benefits on the date when you would have first become eligible to begin receiving benefits. If you made employee contributions to the plan and have not withdrawn them when you die, your surviving spouse can choose to withdraw them at any time before beginning QPSA benefits, or leave them in the plan and receive a higher monthly QPSA benefit.
The HCTC is an IRS tax credit for health care insurance premiums, which may apply to certain individuals who are 55 to 65 years of age and receive benefits from PBGC. For more information on the HCTC, see our frequently asked questions.
To avoid any interruption in benefit payments to retirees in terminated plans that PBGC takes over, PBGC makes payments to retirees on an estimated basis until we can determine final benefits. We strive to make our estimates as accurate as possible. In some cases benefit underpayments result because the estimate is less than the amount the individual was entitled to receive.
Yes. If you have been underpaid, we will send you a single lump-sum payment with interest to make up the difference between what we paid and what you were to receive.
If your lump-sum payment is less than $5,000 and less than three times your monthly benefit, PBGC will make the payment automatically. If you get your monthly payments by check, we will issue you a check for the underpayment; if you receive your payments by electronic deposit, we will issue your lump sum by electronic deposit.
If your lump-sum payment is $5,000 or more and at least three times the amount of your monthly benefit, you will need to apply for the lump-sum payment. In that case, your benefit determination will include an Application for Lump-Sum Payment.
If your lump-sum payment is $5,000 or more and at least three times the amount of your monthly benefit, you have the option of rolling the payment over into an Individual Retirement Account (IRA) or another qualified retirement plan. This decision has important tax consequences. The Application for Lump-Sum payment gives you the opportunity to choose whether you want to receive the lump-sum payment directly or roll it over, and provides you with information to help you make an informed decision.
For each month in which PBGC paid you estimated benefits, we look at the difference between what you were entitled to receive and what you received to determine whether you were overpaid or underpaid in that month. PBGC then sums up all the monthly underpayments and/or overpayments. In performing this determination, PBGC pays interest on underpayments.
Yes – PBGC pays interest on all underpayments.
Probably not. If you use the Simplified Method from IRS Publication 575 to determine the taxable and non-taxable amounts of your annuity payments, and some portion of your annuity payments from the plan has been taxable in all prior years, then the entire back payment is taxable income. Under the Simplified Method, you determine the non-taxable amount of your annuity payments for the year based on the amount you contributed to the plan and the expected number of pension payments you will receive. Any amount you receive from the plan in excess of the non-taxable amount is taxable. So, if any portion of your pension payments during a year was taxable, you have already received the full non-taxable amount for that year.
However, if either 1) you do not use the Simplified Method to determine the taxable and non-taxable amounts of your annuity payments, or 2) in some prior year the total amount of your annuity payments from the plan was non-taxable, then some portion of the back payment might be non-taxable. You should refer to IRS Publication 575 and consult a tax advisor to determine the taxable and non-taxable amounts of your back payment.
If PBGC has determined that your final benefit amount is greater than the estimated benefit you are currently receiving, we will increase your benefit, even if you file an appeal.
If PBGC has determined that your final benefit amount is less than the estimated benefit you are currently receiving, we will not change your benefit until the Appeals Board has issued a decision. In that case, you will continue to receive your estimated benefit.
Yes. You will still receive a lump-sum payment for your underpayment even if you appeal your benefit. We will not delay the payment while your appeal is pending.
Once the Appeals Board has issued its decision, we will recalculate any over- or underpayment you have received based on your final monthly benefit (as determined by the Appeals Board) and all payments you have received as of that date. If you have been underpaid, we will issue you another lump-sum payment.
Delphi Salaried Overpayments
FAQs Print Version [PDF]
To avoid any interruption in benefit payments to retirees and beneficiaries in terminated plans that PBGC takes over, PBGC initially makes benefit payments at the level promised by the plan. Once we have sufficient information, we adjust benefits to an estimate of the amount that PBGC can legally pay. For the Delphi Salaried plan, PBGC made most of these adjustments about 6 to 8 months after we became responsible for your pension plan. Most overpayments -- payments that are greater than the amount participants are entitled to receive -- are due to those earlier payments at the plan benefit level.
Even when PBGC adjusts benefits, they are still “estimated” benefits until we determine the final benefit amounts due from PBGC under the terminated plan. Because these are estimated payments, some individuals may receive additional overpayments or underpayments until their final benefits are determined.
PBGC determines your total overpayment or underpayment by comparing what you were paid to what you are entitled to receive. We can make this calculation only after we have determined the benefit you are entitled to receive.
No – you will not have to repay the overpayment in single lump sum. To reduce the burden on participants and beneficiaries, PBGC collects the overpayment by "recoupment," which means that we collect the amount you have been overpaid by reducing your monthly benefit by a percentage called the recoupment percentage. Recoupment is designed to spread the reduction out over the expected duration of the benefit (including payments to your beneficiary, if any). Once the overpayment has been repaid, we stop the reduction for recoupment.
Generally, we limit the recoupment percentage to no more than 10% of your monthly benefit.
Your Benefit Determination will tell you the recoupment percentage and the amount of your benefit before and after the recoupment percentage is applied.
Yes. If your benefit changes in the future, this same recoupment percentage will be applied to that benefit until the overpayment has been repaid. For example, say you are receiving a supplement that is payable until age 62 and one month, and that your benefit equals $2,500 before age 62 and one month and $2,000 thereafter.
Also, say that your recoupment percentage equals 2% of your benefit amount.
Your benefit before age 62 and one month with the recoupment percentage applied is $2,450, determined as follows:
Monthly Benefit until age 62 and one month: $2,500 (before recoupment)
Recoupment amount = $2,500 x 2% = $50
Monthly Benefit until age 62 and one month: $2,500 - $50 = $2,450
Your benefit after age 62 and one month with the recoupment percentage applied is $1,960, determined as follows:
Monthly Benefit after age 62 and one month: $2,000 (before recoupment)
Recoupment amount = $2,000 x 2% = $40
Monthly Benefit after age 62 and one month: $2,000 - $40 = $1,960
Yes. The same recoupment percentage will apply to the payments to your survivor until the overpayment has been repaid.
For each month in which PBGC paid you estimated benefits, we look at the difference between what you were entitled to receive and what you received to determine whether you were overpaid or underpaid in that month. PBGC then sums up all the monthly underpayments and/or overpayments month by month.
The result is the net overpayment or underpayment. In performing this determination, PBGC does not charge interest on overpayments, but it does pay interest for any month in which your over-/underpayment balance is a net underpayment.
No. PBGC does not charge interest on overpayments.
Yes. Please refer to the question above on how PBGC determines the amount of your overpayment. You will see that we take into account all underpayments when we determine the amount of your overpayment.
No. If you appeal, PBGC will not reduce your benefit and we will not apply recoupment for prior overpayments until the appeal is decided. If the amount the Appeals Board determines you are entitled is less than what you were paid, any amounts that you received in excess of what you are entitled to receive during the appeal period will be included in your total overpayment.
Yes. For some participants, even though PBGC has determined that they have been overpaid based on past payments, we have also determined that the estimated benefit they are currently receiving is less than what they are entitled to receive.
When this occurs, PBGC will increase your benefit to the amount you are entitled to receive, even if you file an appeal. And we will not apply recoupment until the appeal is decided. Once the appeal is decided, we will apply recoupment if there is an overpayment.
Once the Appeals Board has issued its decision, we will recalculate any over- or underpayment you have received based on your final monthly benefit (as determined by the Appeals Board). All payments you have received as of the date of the Appeals Board determination will be included in the recalculation.
If you have been overpaid, we will start reducing your monthly benefit to recoup the overpayment at that time.
Visit our Contact Us page for more information.