Finance

Detroit Pension Board Urges Voters to Back Cuts

by | June 12, 2014
 

By Joe Guillen

The Detroit general pension fund board voted today to fully support the city's restructuring plan, including a requirement that the board establish an oversight committee to watch over investments for the next 20 years.

The board will send letters to its members -- approximately 18,000 active workers and retirees -- urging them to vote "yes" on the city's plan, which would cut their monthly pension checks by 4.5% and, for many, recoup a portion of their annuity savings accounts.

The pension board trustees voted 5-2 to support the plan, which ultimately must be approved by U.S. bankruptcy Judge Steven Rhodes. A trial to confirm the plan is scheduled to start on Aug. 14.

Trustee June Nickleberry, a city worker for more than 25 years, said she voted against supporting the city's plan because she didn't feel comfortable telling workers and retirees how to vote. Nickleberry said she still hasn't decided how she will vote on her ballot.

"I believe it's a good deal. I believe that the attorneys have been working their (butts) off. I'm a union rep so I know about negotiations and how hard it is to keep everything you want," she said. "I just feel uncomfortable with the fact that we're telling people to vote 'yes' on it."

Trustee Wendell Anthony, who is also president of the Detroit NAACP, said he voted to support the city's plan with trepidation. Anthony was not present at today's meeting but participated via a conference call.

"I don't like the plan but in the best interests of the constituents, I vote yes," he said.

The general pension board last week hosted an informational session for members urging them to vote "yes" on the city's plan.

But conditions on the so-called "grand bargain" -- a pot of money equivalent to $816 million that will help reduce pension cuts -- call on the city's pension funds to provide assurances that it will fully support the city's restructuring plan, including establishment of an oversight committee and terms of an agreement to restore retirement benefits in the future under certain conditions.

Members of the General Retirement System and the Police and Fire Retirement System have until July 11 to return their ballot. If either pension fund rejects the city's offer, funding for the grand bargain would fall apart and retirees would face harsher pension cuts. The Police and Fire system board is expected to vote on the plan Thursday.

(c)2014 the Detroit Free Press

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