PRC on the Detroit Bankruptcy: Allowing Cuts to Retirees’ Pensions is “Unprecedented and Unconscionable”

PRC on the Detroit Bankruptcy: Allowing Cuts to Retirees’ Pensions is “Unprecedented and Unconscionable”


The Pension Rights Center released a statement reacting to Judge Steven Rhodes’ decision to permit the city of Detroit to reduce pensions by entering Chapter 9 bankruptcy:

“The decision to let Detroit’s bankruptcy move forward means that Emergency Manager Kevyn Orr can proceed with his plan to cut the pensions of the city’s workers and retirees. This is unprecedented and it is unconscionable,” said Karen Friedman, executive vice president and policy director of the Pension Rights Center.

“Orr wants to break a contract made with the people who spent their working lives serving the city. These are not big pensions. These are pensions that average about $19,000 a year for most city workers and $30,000 a year for retired policemen and firemen, many of whom do not receive Social Security. Cutting the benefits of retirees who are less able to get back into the workforce is simply wrong. These hard-working Americans didn’t create this mess, but they are being scapegoated for it.

“This decision sets a terrible precedent. Allowing a city to cut its retirees’ pensions is a signal to other cities across the country that they don’t need to fund their pensions responsibly and that they can renege on these promises when they run into trouble. 

“The assault on retirees today is greater now than at any other time. We’re seeing it in Detroit. We’re seeing it in states that are trying to get rid of good pension plans. We’re seeing it in major corporations that are transferring pensions to insurance companies. We’re seeing it in Congress, where members are being heavily lobbied to introduce legislation that would allow multiemployer plans to cut retiree pensions. And there are the ongoing efforts to cut back on Social Security.

“If these attacks continue, Americans will wonder if they can rely on any promises, or any contract, including those paid for by their deferred wages.

“We recognize that Detroit’s financial situation is serious, but it was not caused by the retirees. Until now, it was universally recognized that retirees’ benefits deserved the strongest protections. This is written into the federal private pension law and is ingrained in laws in almost every city and state in the country, as well as many state constitutions. But with the Detroit bankruptcy court’s ruling, this fundamental principle is being undermined.

“The Center is asking all working and retired Americans to call upon their employers, unions, and elected officials to put a halt to these assaults on retirement security.”

Contact Name: Nancy Hwa

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