November 2015 Delphi Salaried Participant Report

(Current Update shown in bold)

Delphi Retirement Program for Salaried Employees
(Delphi Salaried Plan)
Processing Update: November 30, 2015

During November 2015, PBGC has:

• Issued over 6,200 benefit determinations to current and future retirees in the Delphi Salaried Retirement Plan, bringing the total number of benefit determinations issued to over 10,000.  PBGC will continue to send benefit determinations to the remaining Salaried Plan participants over the next several months.

During October 2015, PBGC:

• Began to issue benefit determinations to retirees in the Delphi Salaried Retirement Plan.  PBGC will continue to send benefit determinations to the remaining Salaried Plan participants over the next several months.

During September 2015, PBGC had:

• Approved the final actuarial case report submitted by Bolton Partners. The report documents the calculation of Salaried Plan benefits and liabilities and other provisions used to produce benefit determinations. PBGC has begun loading benefit calculation data into the agency’s payment system. We will send benefit determinations to Salaried Plan participants over several months, starting in October.

During August 2015, PBGC had:

• Completed its review of the draft actuarial case report submitted by Bolton Partners, Inc. The agency has sent comments back to Bolton Partners, who will review and incorporate changes to be sent back to PBGC for final review and approval of the report.  PBGC remains on track to begin issuing benefit determinations in October 2015.

As of July 2015, PBGC had:

• Continued its review of the draft actuarial case report received from Bolton Partners in June.  Once the report is approved, PBGC will load the benefit calculation data into the system for producing final benefit determinations.  PBGC remains on track to begin issuing benefit determinations in October 2015; that process will continue over several months into 2016.

As of June 2015, PBGC had:

• Received from Bolton Partners the complete draft of the actuarial case report.  The report documents the calculation of Salaried Plan benefits and liabilities and other provisions that are needed to produce final benefit determinations.  PBGC actuaries have begun their review of the report.  Once the report is approved, PBGC will load the benefit calculation data into the system for producing final benefit determinations.  PBGC is on track to begin issuing benefit determinations in October 2015.

As of May 2015, PBGC had:

• Received from Bolton Partners final drafts of the various tables and appendices that support the analysis in the actuarial case report. PBGC has also finalized its summary of plan provisions and tables of benefit adjustment factors for inclusion in the actuarial case report.

As of April 2015, PBGC had:

• Received from Bolton Partners a preliminary analysis of benefits for participants currently in pay, comparing expected final benefit amounts with current estimated benefit amounts. Next steps include PBGC actuaries reviewing the Bolton analysis before it is incorporated into the actuarial case report.

As of March 2015, PBGC had:

• Completed preliminary review of the draft actuarial case report submitted in late 2014 by Bolton Partners. The draft report documents the calculation of Salaried Plan benefits, liabilities and other provisions. Comments from agency actuaries are being incorporated into a revised draft report. Ultimately, Bolton’s actuarial case report will be reviewed and approved by PBGC actuaries as part of the process for final benefit determinations being issued to Salaried Plan participants.

As of February 2015, PBGC had:

• Kept to the schedule for action on the Delphi timeline when the agency’s Benefits Administration and Payment Department (BAPD) and Financial Operations Department (FOD) worked together in February 2015 to complete reconciliation of the Delphi pension assets. The reconciliation included a review of KPMG’s final plan asset evaluation report and supporting schedules produced by BAPD during its earlier review of the KPMG report.

As of January 2015, PBGC had:

• Met the schedule for agency action on its Delphi timeline, when PBGC’s Asset Evaluation Division (AED), part of the Benefits Administration and Payment Department (BAPD), completed in January 2015 its comprehensive review of KPMG’s draft evaluation report on the Delphi pension assets. AED, which received KPMG’s draft report in late November 2014, sent its final plan asset evaluation report, work papers, and financial account information to the Financial Operations Department (FOD) for review and final reconciliation. The agency’s Delphi timeline called for FOD to complete its work on this matter during February 2015.

As of December 2014, PBGC had:

• 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 started issuing final benefit determinations for the Delphi Salaried Plan in October 2015. Of course, any participant/beneficiary has the right to appeal PBGC's final benefit determination.

See Delphi Corporation Plan History for more background.