Judge Allows Delphi To End Salaried Retiree Benefits.

[bobdoering]

The Wall Street Journal (2/25, McLaughlin) reports, "Delphi Corp., the largest parts supplier to General Motors Corp., won court approval to terminate health benefits for thousands of retired salaried employees after arguing the move is critical to keeping its slow-going bankruptcy reorganization afloat." The approval to end "the benefits to about 15,000 people allows the auto supplier, which has been operating under Chapter 11 protection since late 2005, to wipe out more than $1 billion in liabilities and $70 million in annual cash costs."

The AP (2/25) notes, however, that the bankruptcy judge who "tentatively approved Delphi Corp.'s request to stop paying for its salaried retirees' health and life insurance...left the door open for some former employees to be excluded from the move."


From SME Daily Executive Briefing

 

[Wes Bucey]

The Wall Street Journal (2/25, McLaughlin) reports, "Delphi Corp., the largest parts supplier to General Motors Corp., won court approval to terminate health benefits for thousands of retired salaried employees after arguing the move is critical to keeping its slow-going bankruptcy reorganization afloat." The approval to end "the benefits to about 15,000 people allows the auto supplier, which has been operating under Chapter 11 protection since late 2005, to wipe out more than $1 billion in liabilities and $70 million in annual cash costs."

The AP (2/25) notes, however, that the bankruptcy judge who "tentatively approved Delphi Corp.'s request to stop paying for its salaried retirees' health and life insurance...left the door open for some former employees to be excluded from the move."


From SME Daily Executive Briefing

Bummer! Spend a lifetime serving the master and at a time when you REALLY need a break, he spits in your eye and says, "HAH! You were a fool for believing anything we said to get you to work for us and make our top executives lots and lots of money!" Remember - these "salaried employees" are NOT the guys who were pulling down 6 and 7 figure salaries - these were the poor slobs who worked long hours for straight salary and zero overtime pay!

In my view,there should be a "clawback law" which allows the bankruptcy judge to reach back fifty years and take money from all those executives who were earning 200 and 300 times what the working stiffs were getting.

 

[smryan]

In my view,there should be a "clawback law" which allows the bankruptcy judge to reach back fifty years and take money from all those executives who were earning 200 and 300 times what the working stiffs were getting.

I like that notion. In my "if I ran the world" scenario there would be a law capping the max difference between the lowest paid and highest paid persons in any organization to 40-50k. More sharing the wealth.

Back on topic - do the retired employees have a legal leg to stand on for a class action suit for breech of contract or something?

 

[wmarhel]

I like that notion. In my "if I ran the world" scenario there would be a law capping the max difference between the lowest paid and highest paid persons in any organization to 40-50k. More sharing the wealth.

Sorry, but no thanks. It may sound good in theory, but can you show evidence where any application of this method has been successful in the long term? I've seen extremes at both ends, where people were paid too much; and where people haven't been paid enough. A blanket practice like you mention wouldn't solve anything.

The wealth is out there, some people just need to be willing to go out and get it. Oh yeah, it might require some sacrifices along the way; but why would anyone expect that?

Back on topic - do the retired employees have a legal leg to stand on for a class action suit for breech of contract or something?

There is probably little they can do since it has gone through the legal system and been approved by it. A class action lawsuit would likely make the lawyers rich.

Wayne

 

[Marc]

Sorry, but no thanks. It may sound good in theory, but can you show evidence where any application of this method has been successful in the long term?

Can you cite evidence where it hasn't been successful in the long run?

 

[SteelMaiden]

I'm going to take an ugly and unpopular stance. Time and time again we have seen where retirement benefits have broken or nearly broken the backs of various industries. My industry for example, is incredibly different today because so many companies went broke say 6-7 years ago because of legacy costs. People retire healthier, earlier, life expectancies are longer, costs are higher. When does it behoove us, as individuals, to begin to be responsible for our own futures? Should we not begin to think what we will need to have for ourselves and begin planning for it instead of expecting to live via the company forever after we retire? Recent history shows us that "the company" might not survive as long as we do. Companies, imho, should begin to teach people to plan for their futures, as well as teach them to make money for the company.

 

[bobdoering]

I'm going to take an ugly and unpopular stance. Time and time again we have seen where retirement benefits have broken or nearly broken the backs of various industries. My industry for example, is incredibly different today because so many companies went broke say 6-7 years ago because of legacy costs. People retire healthier, earlier, life expectancies are longer, costs are higher. When does it behoove us, as individuals, to begin to be responsible for our own futures? Should we not begin to think what we will need to have for ourselves and begin planning for it instead of expecting to live via the company forever after we retire? Recent history shows us that "the company" might not survive as long as we do. Companies, imho, should begin to teach people to plan for their futures, as well as teach them to make money for the company.

The big picture is that it is robbing Peter to pay Paul - it has to come from somewhere. If the companies lost out because people retire healthier, earlier, life expectancies are longer, costs are higher - then individual's crystal balls would likely not be that much clearer (especially across the scope of all employees - not just the frugal, hardscrabble ones.) You also would have hoped (apparently these things don't work that way anymore) that there is a bulk cost benefit in numbers.

But, without a doubt, at least it WILL clear the company books. And that may be a level playing field to smaller or newer companies that have less legacy cost.

 

[Jim Wynne]

I'm going to take an ugly and unpopular stance. Time and time again we have seen where retirement benefits have broken or nearly broken the backs of various industries. My industry for example, is incredibly different today because so many companies went broke say 6-7 years ago because of legacy costs. People retire healthier, earlier, life expectancies are longer, costs are higher. When does it behoove us, as individuals, to begin to be responsible for our own futures? Should we not begin to think what we will need to have for ourselves and begin planning for it instead of expecting to live via the company forever after we retire? Recent history shows us that "the company" might not survive as long as we do. Companies, imho, should begin to teach people to plan for their futures, as well as teach them to make money for the company.

It's certainly time for people to stop trusting their employers for anything, but that doesn't address the issue at all. Companies made promises, and based on those promises employees believed that they were making sound decisions about their futures by going to work for the companies that made the promises.

 

[SteelMaiden]

I guess part of my part is that not only can we continue to believe that promises will always be kept (as is painfully obvious), the business community needs to learn a lesson here as well and quit making promises that might not be able to be kept.

 

[somerqc]

Although I am no rookie, I am still quite young. My career started after the recession of the early 90's. I have NEVER trusted a company for any part of my future.

I will give whatever company I work for 110% of my effort while I am employed by them, but I expect nothing more. If I get it great, but, I don't count on it beyond tomorrow. I give the effort - you pay me what we agreed that my renumeration would be. Simple.

I believe this is part of the difficult shift from one generation to the next.

I wish we had many of the benefits that the previous generations had access to (re: my father is making as much as me in retirement thanks to a very generous retirement plan that he now gets paid by); however, that is not reality so to expect it is foolish. I have been saving for retirements since my late 20's. This gives me 30 years to build a nice retirement fund. Should be possible.

Treat your future/career like a business and plan accordingly. This isn't going away anytime soon so we might as well get used to it.



John