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Orr Tells Detroit Retirees: Your Pensions, Benefits Are Safe for 6 Months Amid Bankruptcy

"[Detroit emergency manager Kevin] Orr provided retirees some temporary relief Friday, telling the Free Press that pension and health care benefits are safe for at least the next six months.... Orr has not yet specified the cuts to pensions he will seek through the bankruptcy process. He has proposed freezing pensions and moving workers to a 401(k)-style plan to help alleviate the pension systems' unfunded liabilities of $3.5 billion. He also wants to move retirees to Medicare or health care exchanges being set up through the Affordable Care Act."

Detroit Retirees' Effort to Restore Pension Fails

"A federal appeals court on Monday rejected a challenge to cuts in Detroit pensions, saying a plan that helped bring the city out of the largest municipal bankruptcy in U.S. history must not be disturbed.... Some retirees sued, saying they deserve the pension that was promised before Detroit filed for bankruptcy in 2013. Thousands saw their pension cut by 4.5%; annual cost-of-living increases were eliminated."

Ex-Trustee in Detroit Pension Scandal Gets 57 Months in Prison

"Ex-Detroit pension trustee Paul Stewart is going to prison for nearly five years for his role in a bribery and kickback scheme that cost city pensioners and police officers $47 million in losses while the businessmen he catered to made off with $5.2 million. Stewart... [told] the judge that he never meant to hurt the pensioners, police or the City of Detroit, where he once worked as a police officer for 33 years. He started his brief speech by first apologizing to the 13,000 pensioners, employees and beneficiaries, then his family and the city of Detroit."

Retiree Health Care, Not Pension Shortfall, a Core Reason for Detroit Bankruptcy

"Despite a bitter dispute over whether Detroit emergency manager Kevyn Orr can reduce pensions, [former Michigan treasurer Andy] Dillon testified during Detroit's bankruptcy trial that the city's nearly $6 billion unfunded retiree health care liability was more concerning.... The city agreed to delay cuts to retiree health care insurance for those not covered by Medicare until the end of January, a month later than they were to take effect ... because of the problems with the [ACA] website and confusion about the insurance changes."

Businessman Will Pay $4M to Detroit Pension Funds in Settlement Over Failed Investment

"The businessman, Donald Watkins, had claimed that some pension trustees shook him down for donations to [ex-Detroit Mayor Kwame Kilpatrick's] legal defense fund, free flights on his jet and campaign contributions, but that he refused to participate. But the pension funds -- one for the police and fire departments, another for general city workers -- claimed that Watkins did them wrong and cost them millions."

Detroit Wins Its Battle to Stretch Out Payments to Police and Fire Pension Over 30 Years

"U.S. Bankruptcy Judge Thomas J. Tucker granted the city's motion and entered an order requiring the Police and Fire Retirement System to amortize the unfunded actuarial accrued liability that exists as of June 30 over 30 years....In addition, the bankruptcy judge enjoined the Police and Fire Retirement System from further attempts to shorten the amortization period." [In re City of Detroit, Michigan, No. 13-53846 (Bankr. E.D. Mich. Jun. 26, 2023)]

Frustrated Detroit Workers Question Hybrid Pension Plan

"Under the new 'hybrid' plan, members of the Police and Fire Retirement System [PFRS] will contribute 6% of their weekly pre-tax base pay toward their pension and civilian workers who belong to the General Retirement System will contribute 4%. PFRS members hired after June 30 will contribute 8%. The city will match employees' contributions and pay into the pension funds."

Detroit Pension Funds' 13th Check Approved by Judge, But Retirees Shouldn't Count the Money Yet

"Detroit's controversial 13th check got new life [on October 4] when an administrative law judge ruled that one of the city's two pension funds must be given the right to make retroactive bonus payments to retirees and active employees for 2011 and 2012. The recommended order ... is largely symbolic for now because U.S. Bankruptcy Judge Steven Rhodes may still block the payments.... [Judge Doyle] O'Connor acknowledged that his opinion might not mean much, saying it 'may well offer little more solace than an assurance of a full ticket-price refund offered while still on the sharply tilting deck of the Titanic.'"

Breakdown of Detroit's $1 Billion Pension Fund Payments

"The city's General Retirement System board -- which is controlled by an independent board that is challenging Detroit's eligibility to file for Chapter 9 bankruptcy--- acknowledged in an affidavit that it gave out $756.2 million in excess earnings to active employees from 1985 through 2007. It gave $195 million to retirees during that same time period and sent $445.3 million back to the city."

Poor Pension Management Helped Land Detroit in the Poorhouse

"One billion dollars. That's how much, over 23 years, one of Detroit's pension funds paid in bonuses to retirees.... [W]ithout question, the bonuses paint a clear picture of the reckless management that led the general pension fund (which covers employees other than cops and firefighters) to this precarious situation, and have increased the burden on city taxpayers, who must make up for the fund's screw-ups."