This week, the city filed an amended plan of adjustment and a related disclosure statement with the U.S. Bankruptcy Court for the Eastern District of Michigan. This paperwork offers clarification for retirees about how much pension benefit reductions would be should the two pension classes involved accept or reject the revised plan of adjustment and the proposed $816 million in outside funding. Detroit’s two public pension funds have opposed the city’s bankruptcy from the beginning (see “Detroit as Bellwether? Maybe Not”).
According to an announcement from the city, for Police and Fire Retirement System participants, voting ‘yes’ for the plan would mean a pension benefit reduction of 6% and elimination of cost of living adjustments (COLA). Voting ‘no’ would mean a 14% benefit reduction and COLA elimination.
As for General Retirement System participants, voting ‘yes’ would mean a 26% pension benefit reduction and elimination of cost of living adjustments. Voting ‘no’ would mean a 34% pension benefit reduction and COLA elimination.
The amended filing also offers greater detail regarding the plan that the city proposed in February, as well as the city’s restructuring efforts. According to the announcement from the city, Detroit expects to file further amendments to the plan and disclosure statement before the scheduled April 14 hearing for approving the statement. City officials say they expect Detroit to exit the bankruptcy process by late summer.