Detroit pensioners are now pushing back on the bankruptcy ruling by a federal judge in favor of extending the city’s pension payments by 30 years.
Detroit pensioners in protest for their pension payments (Photo: NBC News)
Detroit Pensioners Push Back On Bankruptcy Ruling
The Duggan administration’s plan to spread out the city’s pension payment commitments over 30 years rather than 20 years was approved by a federal bankruptcy court, according to a motion for reconsideration filed by Detroit pensioners last Monday from the Police and Fire Retirement System of Detroit.
Detroit pensioners from the police and fire department of the city are now pursuing legal action that has been underway since August when the city government first sued the pension system to impose a 30-year pay-out plan. A 30-year amortization term is “in fact part of the (bankruptcy) Plan of Adjustment and that the Police Fire Retirement System cannot change it,” Judge Thomas Tucker declared in favor of the city on June 26.
The latest request asks the court to provide further information on the potential imposition of a 6.75% rate of return that was expressly intended to end after 10 years under the Plan of Adjustment, the bankruptcy exit plan. According to the Detroit pensioners’ filing, the Police and Fire Retirement System’s Board of Trustees and Investment Committee will be responsible for determining the pension fund’s rate of return and amortization funding policy after June 30. The city’s debt obligations will be paid off in 2054 if interest is paid at the established 30-year rate. Detroit pensioners from the police and fire department want the pension fund to be fully funded sooner.
READ ALSO: Massachusetts’s Illegal Immigrants Can Now Get A Drivers License
Behind The Duggan Administration’s Plan For Detroit Pensioners
The administration of Mayor Mike Duggan said that Detroit would have had to pay $12 million more annually if the Detroit pensioners’ desired 20-year amortization term had been used. The Duggan administration’s plan to spread out payments reduces the immediate financial impact on the city and enables it to pay down pension commitments “sustainably over 30 years,” according to the court filing.
The payment plan is part of a 2014 city bankruptcy arrangement that enabled Detroit to postpone payments to retiree pension funds until this year. This month, the city formally began making payments to its two pension funds.
READ ALSO: Texas Democrats Propose Property Tax Relief For Renters
