DETROIT BANKRUPTCY FALLOUT

Detroit retirees fret over pensions

Bankruptcy could force cuts

7/24/2013

DETROIT — K.D. Bullock had been retired from the Detroit Police Department for nearly 17 years and was working as a casino security supervisor when he encountered a problem last March. Long accustomed to working on his feet, he suddenly couldn’t make it up a flight of stairs.

After months of doctor’s appointments, he was diagnosed with rheumatoid arthritis, which makes it difficult for him to breathe.

He not only left his job but had to begin paying others for the fix-up work he’d been doing on his historic six-bedroom house.

Now, he could be facing another hit, this time to his $2,400-a-month pension.

The pensions earned by more than 21,000 retired municipal employees have been placed on the table as Detroit enters bankruptcy proceedings with debts that could amount to $20 billion. Labor unions insist the $3.5 billion in pension benefits are protected by state law, but the city’s emergency manager has included them among the $11 billion in unsecured debt that can be whittled down through bankruptcy.

A federal judge has scheduled the first hearing on the city’s case for today.

The prospect of sharply reduced pension checks has sent a jolt through retired workers who always counted on their pensions, who sometimes sought promotions just to sweeten the pot, and never imagined they could be in danger even as the city’s worsening finances finally led to its bankruptcy filing last week.

The average annual pension payment for Detroit municipal retirees is about $19,000. Retired police officers and firefighters receive an average of $30,500. Top executives and chiefs can receive $100,000.

Police and firefighters don’t pay into the Social Security system, so they don’t receive Social Security benefits upon retiring.

Mr. Bullock, 70, said the idea that his pension could be reduced is “a hard pill to swallow” after 27 years on the force working his way up.

He said he was proud to be the first black commanding officer of the department’s communications system.

Retirees are putting their hopes in state lawsuits filed by the pension funds.

They argue that pensions are protected by the Michigan Constitution and should not be part of the bankruptcy process. The bankruptcy judge will likely rule on whether federal bankruptcy law supersedes the state guarantee.