Delphi $323m Short On Pension Fund Contributions
Bankrupt GM supplier Delphi announced yesterday that it had contributed $46m to its pension fund. It sounds like good news for a company struggling to emerge from bankruptcy– until you realize that federal law required a $369m contribution. The Detroit News tells us that despite Delphi having $3.3b in unmet pension obligations by the end of 2007– on top of this latest shortfall– the company will not be transferring pension obligations to the Pension Benefit Guaranty Corp. And don't blame Delphi Prez Robert Miller, because he tells us the ship is righted, and now needs only a few billion in funding to cover pension costs and ensure liquidity (couldn't we all say that?). With Appaloosa Capital pulling out of a planned $2.55b bailout deal, Delphi is considering suing them for a $250m "termination fee." Hey, if they stuck it all in the pension fund, they'd only be a few million from compliance with Federal law. Just like that.
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Strange. Very strange. My gut tells me that there is more going on here than meets the eye. So why wouldn't a company ditch its pension plan on the taxpayers like the airlines did? They certainly could have. Why would the company risk having a pension take over by the PGBC, especially seeing how it is legally underfunded? I can only think of one reason. Because the pension is is worse shape than they have said. And because they are scared to death to loose whatever funds the pension has (or perhaps doesn't have) on the books. Something seriously stinks here.
The pensions are a ponzi scheme and you're going to see alot of failures when the baby boomers start retiring in mass. Not to mention the healthcare system trying to buy diapers for that huge bubble of postwar exuberance.