Darren Moore While the details of Detroits historic bankruptcy filing Thursday continue to unfold, one thing is clear: Tens of thousands of current and retired city workers face the risk of significantly smaller pension checks. As part of a reorganization plan, Emergency Manager Kevyn Orr has proposed to cut the citys debt by nearly 83% from $11.5 billion to $2 billion. Among those reductions, Orr has proposed major pension cuts for both current and former city workers. There must be significant cuts in accrued, vested pension amounts for both active and currently retired persons, Orr wrote in the June proposal to creditors. Detroit has long struggled to afford the retirement benefits it has promised to workers. And as of June 30, the pension funds currently had an estimated shortfall of about $3.5 billion, a number far larger than was previously estimated, according to the proposal. If the cuts are approved, that would ultimately mean that retirees would see smaller checks than theyre currently receiving and workers would retire with lower benefits than expected. This is money theyve earned, they counted on, said Karen Ferguson, director of the Pension Rights Center, a nonprofit that advocates for retirees. They need these checks to pay their bills.
Posted on: Thu, 23 Jan 2014 02:45:47 +0000