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A representative for Delphi Corp. (DPH) salaried employees told U.S. Senate lawmakers Thursday he believes government officials violated federal pension law.

The charge stems from a deal the Pension Benefit Guaranty Corp. reached with Delphi and the old General Motors during GM's expedited bankruptcy. The deal of $70 million in cash from GM and a $3 billion unsecured bankruptcy claim from Delphi relinquished liens the PBGC placed on Delphi assets during Delphi's roughly four-year bankruptcy stint.

In prepared testimony before the Senate Health, Education, Labor and Pensions Committee hearing to address retirement security and inadequacies Thursday, Bruce Gump of the Delphi Salaried Retiree Association said it believes the U.S. Treasury Department and Auto Task Force pressured the government pension insurer into this deal, which possibly violated the Employee Retirement Income Security Act, or ERISA.

"They took this action knowing that they would have to assume billions of dollars in unfunded pension liabilities and drastically reduce the pensions of Delphi retirees," Gump said in his testimony. "These illegal actions cost the Delphi retirees, both hourly and salaried, billions of dollars in lost pension annuities."

PBGC officials declined to comment.

The PBGC liens, valued at nearly $3.4 billion, were meant to protect Delphi pension plans but instead led to Delphi being unable to sell its U.S.-based manufacturing assets to GM. Delphi was also unable to sell its remaining offshore business.

But in order for the GM bankruptcy to move forward, all pending business matters and the Delphi liens had to be settled. Gump said the matter should not have been settled at the expense of salaried workers' retirement funds.

"The U.S. Treasury set the 'standard of fairness' in the GM and Delphi bankruptcies when they provided funds for full pensions and reduced health-care insurance for the unionized workers," he said, adding, "The U.S. Treasury and the Auto Task Force have discriminated against us."

The Senate panel plans to hear testimony on retirement security and what additional pension funding measures lawmakers should consider. U.S. businesses have been freezing defined benefit plans and threatening to reduce work forces to help pay higher-than-expected pension costs brought on by the economic downturn.

Pension advocates and sponsors were among others who testified at the hearing.

The hearing follows legislation introduced in the House of Representatives on Tuesday by Reps. Earl Pomeroy (D., N.D.) and Pat Tiberi (R., Ohio) that would provide additional relief to ease pension plan sponsor's required minimum contributions.

The hearing also included testimony from Barbara Bovbjerg of the Government Accountability Office. Bovbjerg testified about income security issues, particularly regarding GAO's finding that workers whose pensions are seized by the PBGC "must wait about three years for PBGC to complete the benefit determination process and provide their finalized benefit amounts."

Bovbjerg said "long delays and uncertainty over final benefit amounts make it difficult for workers to plan for retirement."

She later added that PBGC must "develop a better strategy for processing complex plans in order to reduce delays, minimize overpayments, improve communication with participants, and make the appeals process more accessible."

Nonetheless, the primary matter for Congress to address is what, if any, pension funding relief measures should be provided to businesses.

Lawmakers, however, have been focused on overhauling the health-care system, a time-consuming effort that could prevent pension legislation from being approved before year-end.

-By Darrell A. Hughes, Dow Jones Newswires; 202-862-9255; darrell.hughes@dowjones.com