WASHINGTON (Reuters) -- Pensions at bankrupt auto parts supplier Delphi Corp. are underfunded by an estimated $10.8 billion, the federal agency that insures corporate retirement accounts said on Tuesday.
Should Delphi decide to terminate its pension obligations during Chapter 11, the Pension Benefit Guaranty Corp. said it would cover less than half of the shortfall, $4.1 billion.
Underfunding is the difference between the plan assets and what a company has promised in benefits. Delphi pension assets are roughly $9 billion, the agency said.
Delphi, the largest domestic parts supplier, filed the biggest bankruptcy petition in U.S. automotive history on Saturday, Oct. 8, in New York. The company has been hurt by high wage and benefit costs and market share losses at GM that lowered demand for its parts.
It was the latest blockbuster insolvency in the transportation sector this fall, following bankruptcy filings by Delta Air Lines and Northwest Airlines in September. Both of those companies have multibillion-dollar pension shortfalls as well.
Analysts believe that Delphi, based in Troy, Michigan, will push its pension deficit on to the deficit-ridden federal insurance programs like big steel companies and major airlines -- including bankrupt United Airlines -- have done in recent years.
Delphi has not said what it intends to do, but its pension picture is complicated by its close relationship with its biggest customer, General Motors.GM spun off Delphi in 1999 and may be called to back some benefits.
Steve Miller, Delphi's chief executive, previously served in the same role at Bethlehem Steel, which shifted $3.7 billion in obligations to the PBGC in 2002.